Personal Care Savings Bonds: A New Way of Saving Towards Social Care in Later Life

Les Mayhew & David Smith

An ageing population ushers in a completely new era requiring society to find new solutions to funding social care and looking after older people. This is not a temporary issue that will go away and there are no quick economic fixes. In the U.K. it is estimated that the population aged 75+ will double from 5 million to 10 million by 2040. Financial building blocks are needed to pay for social care that will be sustained for decades and provide extra security for the individual. This paper proposes a new savings product called Personal Care Savings Bonds (PCSBs), which are designed to encourage saving for social care by providing extra money at the time of greatest financial need. PCSBs are likely to be attractive to older people who have only a basic pension and modest savings, but also to other age groups, as they not only attract interest but also pay prizes. Based on reasonable assumptions, the paper shows how the fund could build into a substantial investment worth £70 billion with regular monthly prize pay-outs. In concept they are somewhat similar to Premium Bonds, another U.K. personal savings product that has been successfully operating since 1956.

Keywords: paying for social care; personal care bonds; care assessments; fund accrual; prize
money; funeral costs

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