There are awful things that beset the old. Dementia is our great mental fear.  There are long and frightening physical complaints that require care. There are people who die easily.

People have state, public and private pensions and in time it will become normal for these to be paid until death.

I wonder if an insurance can be built into a pension the cost of which would be met by sacrifice of a part of the monthly payment paid (like a union levy or similar).

This insurance could be “standard” but could be opted out by pensioners. If the pensioner opts out then no payment is made when a calamitous occurrence lays them low.

Fair payments  could be agreed between Government Actuaries and insurance companies.

I would like to think that the insurance industry could agree with the Government Actuary’s Department a fair system of premiums and claims. I would go for a default payment of say 5% of pension with the option to go up to much higher or to opt-out.

This could make a single payment in some circumstances (like critical illness where the impact will be short) and could be paid as extra pension in others (say dementia which could be paid over time).

I would like to think that those who stayed in would not be taxed for the money sacrificed but would buy “tax-free”. Those who had no pension could buy this cover with tax-relief as they would if saving (we used to have this way to buy life insurance – through a pension structure).

I say this because I have just read a response to Patrick Jenkins’ recent article in the FT which I have commented on.

As I tried to sell social care products in the late eighties and early nineties and never sold one, I agree with James Lloyd but that people will pay for this insurance if it is built into the payment, I have no doubt. They are no more likely to opt-out of this insurance than they were to opt-out of the pension that got them in to the pension’s paying out now!

This is why the Casey Commission need only replicate the original pension commission and use behaviour to nudge people towards insurance.