Financing and Sustainability of Future Proofing Aged Care

Hear from distinguished experts as they discuss the financing and sustainability of future proofing aged care in Australia at this 1-hour webinar, co-hosted by the ARC Centre of Excellence in Population Ageing Research (CEPAR) and the UNSW Ageing Futures Institute (AFI).

Program (times in AEST):

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1.00pm: Welcome remarks

Scientia Professor Kaarin Anstey, CEPAR Co-Deputy Director, AFI Director, UNSW Sydney

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1.05pm: On Sustainable Aged Care Financing in Australia

Professor Michael Sherris - CEPAR Chief Investigator and Director of Industry Engagement, and AFI Investigator, UNSW Sydney

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1.25pm: Flexible Insurance for Informal Long-term Care

Professor Hazel Bateman - CEPAR Co-Deputy Director, and AFI Investigator, UNSW Sydney

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1.45pm: Panel discussion on Financing and Sustainability of Aged Care

Professor Hazel Bateman - CEPAR Co-Deputy Director, and AFI Investigator, UNSW Sydney

Professor Michael Sherris - CEPAR Chief Investigator and Director of Industry Engagement, and AFI Investigator, UNSW Sydney

Scientia Professor John Piggott AO - CEPAR Director, and AFI Lead Investigator, UNSW Sydney

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2.00pm: Closing remarks

Scientia Professor John Piggott AO - CEPAR Director, and AFI Lead Investigator, UNSW Sydney

Background papers:

• On Sustainable Aged Care Financing in Australia, Michael Sherris, CEPAR Working Paper 2021/20

• Sherris, Michael (2021): On Sustainable Aged Care Financing in Australia. Australian Economic Review, Volume 54, Issue 2, June 2021, Pages 275-284.

• Flexible Insurance for Informal Long-Term Care: A Study of Stated Preferences, Shang Wu, Hazel Bateman, Ralph Stevens and Susan Thorp, CEPAR Working Paper 2021/17

• Submission to the Royal Commission on Aged Care Quality: Aged Care Financing, Rafal Chomik and John Piggott

• Royal Commission into Aged Care Quality and Safety: Invitation to respond to questions on financing aged care, Michael Sherris

• Submission to Royal Commission into Aged Care Quality and Safety on the Financial Sustainability of Aged Care, Michael Sherris

Speaker bios and abstracts

Kaarin Anstey is a Scientia Professor of Psychology, Director of the UNSW Ageing Futures Institute and Co-Deputy Director of CEPAR. Kaarin’s research programs focus on the causes, consequences and prevention of cognitive ageing and dementia. Kaarin also conducts research into older driver safety, wellbeing, and evaluates interventions to promote mobility and healthy ageing. A Chief Investigator since 2001, Anstey has led the PATH Through Life Project and since 2006. PATH is a 20-year longitudinal study of mental health, wellbeing and cognitive function spanning the adult life course that has three cohorts called the 20s, 40s and 60s. She has led (CIA) NHMRC grants funding Wave 3 (20s, 40s, 60s) and Wave 4 (parts of 20s, 40s, full 60s) and ARC funding for Waves 5 (40s, 60s) and 6 (60s). Since 2019 the PATH study has been jointly hosted by UNSW and ANU, and Anstey's team at UNSW and NeuRA provide the data management for the project, the administrative and logistical support for the study, and its Research Committee. Kaarin also leads the 'Better Drive' program of interventions to improve older driver safety, the 'Body-Brain-Life' brain health interventions that focus on reducing risk of dementia. Kaarin leads the NHMRC Boosting Dementia Grant 'LEAD' which focusses on dementia risk assessment and translation. Kaarin is also lead investigator on an NHMRC Centre of Research Excellence in Cognitive Health, is a Director of the NHMRC Dementia Centre for Research Collaboration. Kaarin is Chair of the International Research Network on Dementia Prevention, a member of the World Health Organisation Guidelines Development Committee for Cognitive Decline and Dementia, and a member of the Governance Committee of the Global Council on Brain Health, an initiative supported by the American Association of Retired Persons and AgeUK.

PROFESSOR MICHAEL SHERRIS: On Sustainable Aged Care Financing in Australia

Abstract: The Final Report of the Royal Commission into Aged Care Quality and Safety (2021) highlighted the challenges in developing a sustainable financing system for Aged Care in Australia. The Report recommended additional funding both in the short term and longer term, to provide an adequate level of aged care quality for older Australians including exploring an actuarially based contributory social insurance scheme for aged care. Sustainable financing of aged care requires a balance between government tax-based financing, individual contributions during working life through an aged care levy, co-payments for aged care costs for those receiving aged care and means testing for these co-payments. There should be a role for private market insurance and financing to supplement government financed aged care support.

Michael Sherris is a CEPAR Chief Investigator, Director of Industry Engagement, and a part-time Professor of Actuarial Studies in the UNSW Business School. His research sits at the intersection of actuarial science and financial economics and has attracted a number of international and Australian best paper awards. He has published in leading international risk and actuarial studies journals, including Journal of Risk and Insurance, Insurance: Mathematics and Economics, Scandinavian Actuarial Journal, ASTIN Bulletin, Journal of Economic Dynamics and Control, North American Actuarial Journal and Geneva Papers on Risk and Insurance. He is on the editorial board of the Annals of Actuarial Science and is a co-editor of the North American Actuarial Journal. Prior to becoming an academic he worked in the banking and finance industry. He has been an active member of the Australian actuarial profession having served on the Council of the Institute of Actuaries of Australia. He was President (2008-2009) of the Asia Pacific Risk and Insurance Association and a Board and Executive Member of the Enterprise Risk Management Institute International. He was Chair of the AFIR-ERM Section of the International Actuarial Association until 2019. He was named Australian Actuary of the Year 2007 in recognition of his contributions to actuarial research and education both internationally and within Australia.

PROFESSOR HAZEL BATEMAN: Flexible Insurance for Informal Long-term Care

Abstract: Retirement income policy design considers longevity risk, market risk and inflation risk but not long-term care risk. However, long-term care has high prevalence and potentially high costs. In Australia (and elsewhere) people tend to self-insure for the cost of long-term care which compromises their financial wellbeing in retirement. There is a reluctance to draw down household assets (including superannuation and housing assets) and to purchase retirement insurance products such as annuities. At the same time there is a preference for ‘ageing in place’ which is not covered by typical long-term care insurance products (were they offered in Australia). ‘Ageing in place’ implies significant costs to informal carers in terms of reduced hours worked and/or early retirement resulting in smaller superannuation balances. This presentation reviews a potential long-term care insurance product that pays a regular income whenever the insured person needs care, irrespective of the formal care costs they actually incur. Using a stated choice experiment we find that the product attracts people who prefer informal care and want to support or compensate their carers, and that people who could access this flexible long-term care insurance would be more likely to release savings set aside as a precaution against future care costs and use those funds to purchase annuities.

Hazel Bateman is Professor in the School of Risk & Actuarial Studies, UNSW Sydney, and a Chief Investigator and Deputy Director of CEPAR. She has expertise in pension economics, behavioural retirement insurance and lifecycle finance. Her current research investigates the role of choice and information architecture, financial advice and financial literacy on lifecycle financial decisions including superannuation, housing and aged care financing. Hazel works closely with the financial services industry, superannuation and pension funds and policy makers in Australia and internationally and has consulted to international organisations including the World Bank and the OECD. She is Chair of the Netspar Scientific Council, a member of the Consultative Committee of UniSuper, an academic member of the China Ageing Finance Forum and serves on the Advisory Boards of the Mercer CFA Institute Global Pension index and the Conexus Institute. In 2019 she was appointed inaugural President of the International Pensions Research Association (IPRA).

John Piggott AO FASSA is Director of the Australian Research Council Centre of Excellence in Population Ageing Research (CEPAR) at the University of New South Wales, where he is Scientia Professor of Economics. A former Australian Professorial Fellow, he has published widely on issues in retirement and pension economics and finance, and in public finance more generally; his research has appeared in the leading international economics and actuarial academic journals. John worked with the Japanese government for nearly a decade from 1999 on pension and population ageing issues. From 2008-2010 he was Visiting Scholar at the Wharton School of Business, and in 2018 was awarded a Rockefeller Residency to undertake research into ageing and inequality in Asia. In 2019, he was appointed co-chair of the Think20 (T20) Task Force on Aging Populations during Japan’s G20 Presidency, and is currently a Commissioner on the US National Academy of Medicine’s International Commission on Healthy Longevity. He jointly led the establishment of the International Pension Research Association (IPRA) which was launched at the OECD in Paris in 2019. At a national level, he was a member of both the Henry Tax Review (2008-9) and the Australian Ministerial Superannuation Advisory Committee for 5 years from 2007. In 2020, he was appointed an Officer of the Order of Australia for contributions to population ageing research and public policy development.

About the UNSW Ageing Futures Institute

The UNSW Ageing Futures Institute, directed by CEPAR Co-Deputy Director Scientia Professor Kaarin Anstey, was established to bring the ageing research at UNSW under one umbrella, to support interdisciplinary research that translates to real-world impact.

About CEPAR

The ARC Centre of Excellence in Population Ageing Research (CEPAR) is a unique collaboration between academia, government and industry, committed to delivering solutions to one of the major economic and social challenges of the 21st century.

Enquiries : cepar@unsw.edu.au