Julie Page discusses why an ageing population is the ‘grey swan’ the profession cannot ignore
The theme for my CII presidency revolves around the ‘unmet needs’ that we as a profession must address to maintain relevance for our clients. And one unmet need unfolding right now, in slow motion, is how we as a society manage the impact of an ageing population. You could call it a ‘grey swan’ event; it is foreseeable but we do not seem to be able to grasp it or quantify its significance.
We are all living longer, but the rate of this lifespan growth is not matched by the time people are in work. We arguably have an unsustainable situation where not only has the current generation typically invested less for retirement, but their contributions are often helping to fund previous generations.
Not only does this threaten the financial wellbeing of future generations, but from a diversity and inclusion viewpoint, an ageing population also disproportionately impacts gender and social mobility. Research has found that women today are four times more likely to give up work to provide care for their older parents, as well as caring for their younger children – the so-called ‘sandwich generation’. And, as the CII’s work on insuring women’s futures showed, when women have a gap in their career, combined with higher divorce rates, they achieve even less financial resilience in later life.
It is also evident that, from a social mobility perspective, the people most significantly affected by the need to give more of their own time towards care at the expense of investing in their own futures, tend to be those at the lower-paid end of society, impacting social mobility.
We need to reimagine our propositions and be more reflective of today’s – and tomorrow’s – life choices
This challenge calls for a collective will between society, employers and government to work towards increasing financial awareness early on in life, so people better understand the need for building financial resilience in later years. For many, the lack of awareness of the issue of long-term care means a woeful level of underpreparedness if personal finances take even a small dip.
The need for government-driven solutions, in the form of long-term care auto-enrolment from an early age can be debated, but there is an immediate role that we, as a profession, can play. Not only in helping to facilitate the education process, but also in the products and services we develop towards building an individual’s financial resilience.
Many of the long-term savings and protection products used today were created decades ago. We need to reimagine our propositions and be more reflective of today’s – and tomorrow’s – life choices when we build products that relate to long-term care and savings and income protection. This means, for example, making products more agile so they can be co-owned and split if a partner chooses or is forced to give up work for a time, so their interest can be protected.
We must play our role by understanding the differences that society has created through time and how our products are feeding difference, when they should be creating more equitable outcomes. It is about creating a systemic response to the challenge of our ageing population by giving people information, choices and designing products that are more responsive to today’s reality, rather than the reality of the past. We all know the grey swan is on its way, now is the time to act.
Julie Page is president of the CII