1. PROJECTIONS OF INCOMES, PENSIONS AND LONG-TERM CARE WORKPACKAGE 5

2. 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)

3. 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.

4. 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

5. NUMBERS OF DISABLED OLDER PEOPLE Age (five bands) and gender Disability (six groups- IADLs and ADLs) Household type (five categories) Housing tenure (two categories)

6. 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

7. 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

8. EXPENDITURE PUBLIC Social services net NHS Disability benefits used to fund care PRIVATE User charges Private purchase of services

9. 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

10. 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

11. Cell-based labour market projection Aggregate SERPS/S2P Distribution of pensioner incomes: state and private Aggregate BSP Aggregate private pensions Pension Credit CTB / HB (planned) Income tax Future income growth PPI Aggregate Model PPI Distributional Model The PPI Aggregate and Distributional Models

12. 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

13. 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

14. 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

15. 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

16. 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