By Rachel Williams Bacon & Woodrow is calling on the Government to make the provision of voluntary l...
By Rachel Williams
Bacon & Woodrow is calling on the Government to make the provision of voluntary long term care insurance a legal requirement for employers
The group said this will fill the gap created by declining provision of informal care and help to counter the impact of an ageing population
Employees would be able to choose whether or not to participate in the scheme and would bear the cost of premiums through an arrangement with either an insurance company or through an LTC trust. All contributions made by employees would be tax deductible with a facility to top up cover purchased
David Gulland, associate at Bacon & Woodrow's healthcare division, said: "Employees are more likely to view an employer-vetted scheme as favourable and, whether or not everyone takes up the scheme, it will increase awareness of long term care
With savings on commission and with economies of scale at work, premiums will be considerably cheaper than individual contracts, he added. Gulland said that in the US growth has been fastest in group schemes. In US companies where employers have taken a proactive role in promoting LTC insurance, take-up levels have reached 25
Sandy Johnstone, LTC strategy manager at CGU, said: "We have had similar thoughts on LTC in the workplace, but to get schemes off the ground there will need to be an element of employer contribution to encourage employees to top up." This, Johnstone suggests, might be a £500 annual contribution which the Government could encourage through fiscal incentives. He added: "Ultimately employers will have to look more closely at LTC
Bacon & Woodrow also made a number of criticisms of the recent Royal Commission report on long term care. With 75% of total care in the UK coming through informal channels such as friends and family, Bacon & Woodrow believes that the report underestimated the role of these carers and the extent to which this will reduce in time
Gulland said: "Increases in the number of working women, in job mobility and in the age at which couples start a family are only some of the pressures which will limit future availability of informal care. If informal care falls by a third, the amount of formal paid care will need to double, a fact which the Royal Commission did not allow for
Gulland also said that the impact of demographic change after 2030 was not considered fully. "Although there may be no demographic time bomb, there is certainly an inexorably rising tide that will have a serious impact after 2030. The dependency ratio in these years will have serious implications for the stability of any public pay-as-you-go scheme, and those currently aged 30-50 should be encouraged to make personal provision
"Voluntary schemes through the workplace provide the ideal answer and, according to our research, 50% of employers already expect to carry out this enabling role within the next 20 years
