Call for long-term care and pensions in same package

clock • 2 min read

Retirement solutions should have the flexibility to provide both decent pensions and meet long-term care costs if necessary, the Association of Consulting Actuaries says.

Speaking at the Association's annual dinner yesterday, ACA chairman Stuart Southall (pictured) said policymakers need to find a "joined-up solution" to address the crises emerging in both pensions and long-term care.

Southall said: "It's difficult to see why we are not considering a solution that looks to provide a decent pension for all, taking account of state pensions, while at the same time encompassing sufficient flexibility to make sure those who need long-term care have their costs largely met from the same package."

However, he cautioned the solution had to be fair between generations saying our children and grandchildren should not be unreasonably burdened with the current or future debts of the greying baby boomers.

"On the other hand, perhaps the inter-generational transfer of pension assets, or assets which could be used for long-term care, could and should be made easier and be better incentivised," he added.

Southall said a lack of flexibility in pension saving was a disadvantage, especially for the young, and suggested three areas where greater flexibility in pensions provision would help.

Firstly, he said the industry would benefit from genuine hybrid arrangements which are genuinely risk-sharing in nature and are treated as such under the regulatory regime.

Secondly, the ACA said flexibilities around annuities and early access to pensions - as proposed by pensions minister Steve Webb - is a useful idea, if conducted within a proper and prudent framework.

Thirdly, Southall said it should be possible on some level to transfer pension savings between generations outside the inheritance tax net.

"To a modest level it is already possible for individuals to fund pensions for non-earners while enjoying basic rate tax relief and in my view this should not be criticised as a tax dodge by the wealthy but as a mechanism by which many more could be encouraged to kick start long-term savings for younger generations," he added.

 

 

 

 

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