FINANCIAL STATEMENTS
STRATEGIC REPORT
GOVERNANCE
The FCA stated they would be engaging with a number of firms across the industry and that phase of work was due to conclude in May 2021. They committed to write to firms after this date to provide an updated view of the key risks posed by firms in this sector and their supervisory plans. At the time of writing this report, we have not been advised the FCA has started this work. LONG-TERM CARE SOLUTIONS Care Plans, or immediate needs annuities, are a form of purchased life annuity. In exchange for an up-front premium, they provide a guaranteed income for the life of the insured to help contribute to the cost of their care. Under current rules this income is tax free when paid directly to a registered care provider, with Care Plans available both to individuals entering care facilities and receiving domiciliary support. As such, Care Plans provide a form of longevity insurance to an individual against the on-going costs of receiving care until their death. On 7 September 2021, the UK Prime Minister announced plans to substantially increase funding for health and social care over the next three years (2022-2025), to be funded by a new tax, the Health and Social Care Levy. From October 2023, the government plans to introduce a new £86,000 cap on the amount anyone in England will have to spend on their personal care over their lifetime. The cap will apply irrespective of a person’s age or income. The government said that the publication of the November 2021 document marked the start of a period of co-production of the statutory guidance with the sector, building on draft regulations and guidance published in 2015. It added that this would be followed by a public consultation in the new year with the intention that the final regulations and guidance will be published in spring 2022. CURRENT MARKET AND OUTLOOK There is a substantial market for care in the UK. The drivers of the need for care are strong because: • there are currently around 1.6 million people aged 85 or over in the UK – this is the average age at which people go into care homes; • this is the fastest growing demographic cohort, with its number expected to almost double over the next 25 years, suggesting a rate in excess of 2.6%; • 40% of all people in the UK aged 65 and over are estimated to have a limiting long-standing illness, which may require care in the future; and • the recent focus on pressures within the care sector has highlighted the need to plan for care, and any government reformwill provide additional focus on the limited number of solutions currently available.
L f t m mrgg mre s z ad g o t rt (£m) LIFETIME MORTGAGE MARKET SIZE AND GROWTH RATE (£M)
5,000
4,000
3,000
2,000
1,000
2011 2012 2013 2014 2015 2016
2017 2018 2019 2020 2021
Lump sum mortgage sales
Existing drawdown mortgages – further advances Source: Equity Release Council New drawdown mortgages – initial advance
N m e o pol (mlin ) a e 65 + NUMBER OF PEOPLE (MILLIONS) AGE 65
% of UK population over age 65
20
18.3% 18.7% 19.9% 21.7% 23.2% 24.1%
15
10
5
2018
2020
2025
2030
2040
2035
Source: O ce for National Statistics
People are becoming increasingly positively disposed to accessing some of the equity in their homes to improve the quality of their later lives or to help their family
A LEADER IN UK LONG-TERM CARE FINANCIAL SOLUTIONS FOR 21 Years
13
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