Abstract:
Population ageing has major implications for the way in which programmes designed to support older people are funded. While social security and means-tested social assistance programmes for long-term care protect the living standards of the poorest, middle income groups face under-appreciated risks, such as outliving their capital or needing expensive long-term care. This paper proposes a social insurance approach to cover these risks which combines a life-time annuity with long-term care insurance. This funding approach encourages intragenerational cost sharing and thus may lessen potential intergenerational conflict. New Zealand may be in a unique position to design new policies and products of this type which better share the costs of an ageing population.
