Abstract
An ageing population ushers in a completely new era requiring society to find new solutions to funding social care and looking after older people. This is not a temporary issue that will go away and there are no quick economic fixes. In the U.K. it is estimated that the population aged 75+ will double from 5 million to 10 million by 2040. Financial building blocks are needed to pay for social care that will be sustained for decades and provide extra security for the individual. This paper proposes a new savings product called Personal Care Savings Bonds (PCSBs), which are designed to encourage saving for social care by providing extra money at the time of greatest financial need. PCSBs are likely to be attractive to older people who have only a basic pension and modest savings, but also to other age groups, as they not only attract interest but also pay prizes. Based on reasonable assumptions, the paper shows how the fund could build into a substantial investment worth £70 billion with regular monthly prize pay-outs. In concept they are somewhat similar to Premium Bonds, another U.K. personal savings product that has been successfully operating since 1956.
Highlights
The social care system in England has been subject to considerable previous scrutiny1 into its funding
On 11 February 2013, the Government of the United Kingdom announced the introduction of a reform to the social care system to prevent individuals from spending all their savings or being forced to sell their home during their lifetime to pay for care, which hitherto had been one of the most politically sensitive areas of social care policy
The fund itself would build up over a period of time, and we provide an illustrative example in the section “Financial principles of Personal Care Savings Bonds (PCSBs)”
Summary
An ageing population ushers in a completely new era requiring society to find new solutions to funding social care and looking after older people. This is not a temporary issue that will go away and there are no quick economic fixes. The paper shows how the fund could build into a substantial investment worth £70 billion with regular monthly prize pay-outs. In concept they are somewhat similar to Premium Bonds, another U.K. personal savings product that has been successfully operating since 1956. Article submitted 19 January 2014; accepted 28 July 2014; published online October 2014
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