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Researchers reveal hidden long-term care cost of raising UK pension age

Raising the UK’s State Pension Age (SPA) from 66 to 68 comes with hidden costs that will negatively impact the long-term care supply for the same rapidly aging population, new research has revealed.

Retirement

As the UK Government reviews proposals to raise the SPA, a study led by the ESRC Centre for Society and Mental Health at King’s outlines how delaying the state pension age would lead to a reduction in the supply of informal care, particularly from women who traditionally provide the majority of care for their older parents.

Informal care currently represents the largest source of long-term-care in most European countries, with large economic value – estimated in 2015 to be over £132 billion in the UK.

The findings of this new study, published in the Journal of Policy Analysis and Management, demonstrate that as women in the UK work more hours due to the increase in their SPA, they must substantially reduce informal caregiving.

Increasing the labour supply of older women could have unintended consequences on the health of older adults in need of care. The reality is that an increase in unmet needs will likely worsen the well-being of these vulnerable adults, thus increasing future health and social care costs for the NHS.– Dr Ludovico Carrino, Senior Lecturer at the University of Trieste and Visiting Professor at King’s

Using data from the UK Household Longitudinal Study (Understanding Society) and the English Longitudinal Study of Ageing (ELSA), and looking at over 7,000 women aged 55 – 65, the research found:

  • An increase in work time by 30 hours/week due to raising SPA, leads to a drop in care time of 6.3 hours/week. This is valued around £6,500 per year for each caregiver (at a rate of £20 per hour).

  • Raising the SPA leads to larger reductions in care time for women in jobs with high physical or psychosocial demands, or women who care for both grandchildren and parents (“sandwich” generation).

  • Older parents receive less help from daughters affected by the increase in the SPA and there is no substituted help from other family members or formal services as a counterbalance. As a result, total support for older parents shrinks when their daughters work longer, potentially leading to higher unmet needs in the elderly.

Dr Ludovico Carrino added: “Our study suggests that policies should not be considered in institutional silos, but their overall welfare impact should be taken into account.

“As conversations about raising State Pension Age are once again circulating, we must ensure that pension reform is accompanied by policies that address the resulting reduction in the supply of informal care and its consequences.”

The study was conducted in collaboration with the Universities of Trieste and Lausanne, and the Office for National Statistics (ONS).

To read the full paper, click here. 

In this story

Ludovico Carrino

Ludovico Carrino

Research Fellow