four - Financing later life: pensions, care, housing equity and the new politics of old age

Summary

In this chapter we review recent developments in the financing of later life in two key areas: pensions and long-term care. In each policy arena, we observe the dominant hegemony that late life welfare should be provided mainly by the individual from wealth accumulated over the life course, after prudent financial management of income, assets and savings, and by the purchase of financial products and welfare services in competitive or quasi-competitive markets. For this conception of late life welfare to have any policy coherence, citizens must be sufficiently ‘financially capable’ to make what with hindsight, will have been the ‘right’ financial decisions for the whole of their adult lives. In the imagination of policy makers, individuals are therefore constructed as malleable subjects who can be ‘nudged’ and educated to become financially capable, fiscally competent, actuarially aware subjects throughout their lives, despite little empirical evidence that this is so. As a result, a highly individualised system of risk and rewards emerges with the potential to exacerbate social inequalities in later life (Taylor-Gooby, 2012).

The provision of financial information and financial literacy education therefore become essential ingredients of modern governance and governing, and ‘Big State’ and universal welfare policies are sidelined. One consequence of this is that when policies fail government blames citizens for any difficult financial predicament in which they might find themselves in later life, rather than, for example, demand side problems in labour markets, housing inequalities, social structures, failing markets, exogenous financial factors, or other social inequalities. This ‘increasing role of financial motives, financial markets, financial actors and financial institutions in the operation of domestic and international economies’ has been termed the ‘financialisation’ of daily life (Epstein, 2006 quoted in Finlayson, 2009: 401). In pensions and long-term care, the financial services industry is assuming a central role in the welfare reform agenda. This is at a time when financial markets are highly volatile, bank interest rates are close to zero, regulatory confidence in the financial services sector is low and rational actors might legitimately question whether increased privatisation offers a reliable route to fiscal security in retirement.