With the UK’s ageing population only set to grow, Matthew Connell examines what the insurance profession is doing to help people enjoy a long and happy retirement
Despite everything we have experienced in the last 18 months, we can still expect our life expectancy to increase during coming decades. The most recent projections from the Office for National Statistics, published in January this year, show that there could be an additional 7.5 million people aged 65 years plus in the UK in 50 years’ time.
Although these kinds of projections are usually accompanied by dire warnings of national bankruptcy or widespread poverty, it is worth remembering some good news. In the UK, we have had an ageing population for several decades and the truth is that older people in the UK are less likely to experience financial hardship than ever before, as the data from the Institute of Fiscal Studies shows.
Of course, there is a significant number of older people who still live in poverty – Age UK estimates 1.8 million – but old age itself is no longer the main reason why people are in poverty.
Later life can be an enormously enriching time for people, where independence and security are greater than ever before.
So, do we even have any problems linked to an ageing society?
First, averages can hide a lot. Female pensioners are most at risk – women tend to live longer than men and earn less during their lifetime. This means they are less likely to plan for the future in detail or to have help when they need it most.
Second, after the age of 75, our cognitive abilities tend to decline, with physical issues around sight and hearing also becoming more common. This reduces people’s ability to get online, understand letters and emails and talk on the phone – all essential for the growing amount of ‘life admin’ that we face.
Third, there is no national plan for care costs (although we are promised one in the autumn), which means older people, quite rationally, tend to make no financial provision at all for care.
If they do make provision, it is more often around keeping money away from government or their local authority than saving.
Fourth, this lack of planning is likely to be most keenly felt by the ‘sandwich’ generation, who increasingly have responsibilities for caring for parents while also supporting adult children through university and beyond.
Finally, younger people will not have some of the advantages many older people have had in preparing for retirement. They are less likely to be members of defined benefit pension schemes and are likely to become homeowners later in life, if at all.
The issues faced by older people in managing their finances, especially as they reach their mid-80s, mean that insurers must take additional steps to ensure that they do not lose out.
Age UK identifies those at most risk as:
- Those who have recently experienced shocks such as serious illness or bereavement.
- Those with a long-term chronic health condition or disability, along with their carers.
- Single women (including divorcees and widows), who tend to have less private pension provision or are forced to retire before state pension age.
- Those without partners, both financially and in terms of lacking the shared decision-making.
- Those who are struggling financially but are not eligible for means tested benefits.
Many insurers are already putting systems and training in place to address these issues. For example, they have introduced ‘tell us once’ systems to ensure that disabled customers don’t have to explain their disability every time they contact their insurer and that they can nominate a carer to talk to the insurance company on their behalf throughout the progress of a claim. Insurers have put in place better management information and introduced new systems for analysing that information, to ensure better outcomes for older customers. Perhaps most importantly of all, they have introduced training around engaging and listening to customers and understanding specific conditions such as dementia and the impact of difficult circumstances such as illness or bereavement.
One insurtech, Settld, has also developed a system for notifying private sector service providers such as banks, utilities, insurance and pension companies about a death with one phone call, rather than putting people through the distress of having to contact multiple companies and repeat the same painful news to a series of organisations.
The CII has published a guide for consumers not focusing on financial products but instead looking at the kind of conversations people can have from their 20s to their 80s, to ensure they can become more financially resilient, share key information with those closest to them and access the right kind of professional help at the right time: https://bit.ly/3l11U4B
The UK is an ageing society and, so far, we haven’t done a bad job at managing this process. However, future success involves both professionals and the public engaging in a conversation about difficult issues around care and finances, so we can continue to enjoy our longer lives.
Dr Matthew Connell is director of policy and public affairs of the CII