Few people recognise the huge challenge of funding long-term care that faces them as greater responsibility is handed over by the State, warns Swiss Re.
The re-insurer also believes the results of an older society will mean a heavier burden on the working population to fund the necessary increases in long term care and healthcare provision.
Its ‘longevity funding issues and potential solutions' report warns that an ageing society will influence governments in many ways, including pension income and healthcare commitments, which all create significant liabilities.
"Many governments are starting to reduce benefits in real terms, thereby increasing the burden on the individual to provide an income in retirement," it says.
"In preparing for a stage in their lives when expenses are expected to increase - for example, long-term care - people are faced with a huge challenge, of which few are aware.
"One solution is to work longer. But this depends on the availability of, and the ability to, work," it adds.
And the re-insurer does not see any change from this path in the future, which it claims will lead to tax rises and greater strain on the working population left behind to support the older generations.
"There is overwhelming consensus that life expectancy will continue to increase, and this will mean a shift in ‘dependency ratios' and the older generation's demand for retirement income and certain public services - especially health-related services - will increase substantially," it says.
The report adds: "Unless there is a change of approach, this will result in a drain on government finances, causing significant increases in tax and social security contributions on a diminishing working population."
