STRATEGIC REPORT
13
The FCA are engaging with a number of firms across the industry and this phase of work is due to conclude in May 2021. They have 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. 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. The COVID-19 pandemic had a severe and well publicised impact on the care home sector during 2020. Although this caused significant short- term disruption to our core market, it has helped to focus attention on the funding issues that the care market is currently facing, and could be the stimulus for future government structural reform for funding this critical consumer need. 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 growth 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)
4,000
3,000
2,000
1,000
2011 2012 2013 2014 2015 2016
2017 2018 2019 2020
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 + UMBER OF PEOPLE (MILLIONS) AGE 65 +
% of UK population over age 65
20
18.3% 18.7% 19.9% 21.7% 23.2% 23.9%
15
10
5
2018
2020
2025
2030
2040
2035
Source: O ce for National Statistics
A LEADER IN UK LONG-TERM CARE FINANCIAL SOLUTIONS FOR
20 Years
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