PROJECTIONS OF INCOMES, PENSIONS AND LONG-TERM CARE

WORKPACKAGE 5

PROJECTIONS OF PENSIONS AND LONG-TERM CARE:WORKPACKAGE 5 (WP5)

WP5 aims to produce projections of expenditure on pensions and long-term care to 2031 and beyond

WP5 involves researchers from:• University of Essex• Pensions Policy Institute (PPI)• Personal Social Services Research Unit (PSSRU)

WORKPACKAGE 5 MODELS

Three models -

• CARESIM model of older people’s incomes and savings;

• PPI models of pensions;• PSSRU model of long-term care

Jointly produce projections of expenditure on pensions and long-term care.

AIMS OF THE PSSRU MODEL

The PSSRU model aims to make projections of:

• Numbers of disabled older people

• Users of long-term care services

• Long-term care expenditure: public and private

• Social care workforce

NUMBERS OF DISABLED OLDER PEOPLE

• Age (five bands) and gender• Disability (six groups- IADLs and ADLs)• Household type (five categories)• Housing tenure (two categories)

INFORMAL CARE

• Current modelling • demand modelled as a function of age, gender,

disability, household type, housing tenure• by source (spouse, adult children, others)• supply modelled using marital status• based on 2001/02 GHS

• Planned modelling• to incorporate availability of living children in

modelling demand for & supply of informal care• new analyses of informal care using 2002/03,

2004/05 ELSA

SERVICES AND BENEFITS

• Residential care – in residential homes, nursing homes and hospitals

• Home care, day care, meals• Day hospital, community nursing, chiropody• Assessment and care management• Disability benefits

EXPENDITURE

PUBLIC

• Social services net• NHS• Disability benefits used to fund care

PRIVATE

• User charges• Private purchase of services

CARESIM

• Uses micro data on older people’s income and capital assets (Family Resources Survey)

• Simulates the means-tests for residential and home care

• Calculates what each older person in the sample would pay for care should they need it

• ‘Ages’ the sample to 2022

LINKS BETWEEN CARESIM & PSSRU MODEL

• PSSRU model provides weights within care type and age/gender/marital status/housing tenure group

• Weights used to adjust CARESIM results for differences in care needs across these groups

• CARESIM provides to PSSRU model• projected trend in % of clients eligible for state

support• projected average % of charges met by state

supported service users• projected average % of user charges and private

payments met using disability benefits

Cell-based labour market projection

Aggregate SERPS/S2P

Distribution of pensioner incomes: state and private

Aggregate BSPAggregate private pensions

Pension Credit CTB / HB (planned)

Income tax

Future income growth

PPI Aggregate Model

PPI Distributional Model

The PPI Aggregate and Distributional Models

Model Links

Common data and assumptions• Demographics• Economics• Current pensioners’ incomes• Policy options

Potential links between the models• Housing tenure• Disability, caring and working over SPA• Future pensioners’ incomes

Final Outputs

Aggregate:• Public expenditure on long-term care• Private expenditure on long-term care• Expenditure on state pensions• Levels of private pension income

Distributions of:• Future pensioners’ incomes• Private and public long-term care expenditure

SCENARIOS (1): DRIVERS OF DEMAND

• Mortality rates: link with WP1• Disability rates: link WP2• Household composition: link with WP3• Housing tenure: link with Caresim• Real rises in unit costs

SCENARIOS (2): PATTERNS OF CARE: EXAMPLES

• Supply of informal care – balance between formal and informal care: link with WP4

• Patterns of formal services: balance between home-based and residential care

• Role of assistive technology

SCENARIOS (3): FINANCING SYSTEM: EXAMPLES

• Current means-tested system• Reforms to treatment of housing assets• Reforms to treatment of savings• Reforms to treatment of income• Means-testing with limited liability• Partnership arrangement• Free personal care