Caring rather than curing – the role of the hospice movement

Although the hospice movement does not cater solely for older people, with an ageing population and the fact that deaths are concentrated in the older age groups, its activities are very relevant to the wellbeing of older people and positive ageing[1].

What is hospice? 

The focus of the movement is palliative care – defined by the WHO as “the active total care of patients and their families by a multi-professional team when the patient’s disease is no longer responsive to curative treatment”.  Palliative care affirms life, but accepts death as inevitable. It provides relief for patients from pain and other distressing symptoms and integrates the psychological, social and spiritual aspects of care, helping patients to come to terms with their own death as constructively as possible. It provides a support system that enables patients to live as actively as they can until death and offers support for families both during the patient’s illness and in bereavement. This differentiates hospice from hospital care, where the focus is to cure and return people to health.

In this context, hospice is a philosophy of care rather than a type of building or service. Its philosophy is that there is always something to be done to help patients. The movement has had a major impact around the world in promoting palliative care and improving care standards.

 

Hospice history

The roots of the words hospice and hospital are the same and date as far back as the 4th century AD when hospitality was provided for the poor, travellers, hungry, thirsty and sick[2]. They were also the places where the pilgrims on their journeys received food and medical care.

In later periods, hospice programmes emphasised inpatient care of the terminally ill – patients were admitted to a residential facility, where they received comfort and care from a multidisciplinary team of caregivers until they died.

The modern hospice movement started in the mid nineteenth century, mainly by religious orders, and has since spread all over the world. Pioneers in the twentieth century included Cicely Saunders and Elisabeth Kubler-Ross. Saunders used her experiences as a nurse, social worker and doctor, to integrate these skills, and opened the first modern hospice, St. Christopher’s, in London in 1967. In the United States, in the 1960s, Kubler-Ross wrote a book “On death and dying” which brought death to the public awareness. These women accelerated the spread of hospice in the UK, USA and the whole world.

A worldwide movement

Hospice programmes now provide a wide range of residential and home-based services[3]. Although there are different models and systems of palliative care, they have common attributes.

An average voluntary hospice consists of an inpatient unit; a day care centre; home care and outpatient clinics and a bereavement support service. They aim to offer a home-like atmosphere, in contrast to the rush of hospital wards. For example, staff usually do not wear uniforms and the décor and processes are as informal as possible. They may share facilities with hospitals to reduce costs. Palliative home care teams allow patients, who prefer to do so, to remain at home. Although many hospices cater mainly for cancer sufferers, they also cover other chronic and terminal illness such as renal, respiratory or cardiac failure, HIV/AIDS, motor neuron disease, etc.

The Hospice Movement in New Zealand

New Zealand’s first hospice, Mary Potter Hospice, was opened in Wellington in 1979. Later that year, Te Omanga Hospice in Lower Hutt, and Saint Joseph’s Mercy Hospice in Auckland, were also opened. Since then hospices have gained widespread respect in the community. But initially there was tension between the movement’s aims and the medical system that it sought to reform and inspire. For example, in the United States healthcare tended to be dominated by technology and the physical components of care overshadowed emotional and spiritual support.

 

Why do we need hospices?

Over the past 50 years, treatments have improved dramatically for illnesses which would have led to early deaths for many people in the past. These improvements mean we are living longer. But as we get older, we may have to live with more illnesses and disabilities for longer periods of time than was the case for past generations. Our healthcare system is set up by speciality, when patients are seen by several specialists that deal with one condition each. This means people living with multiple conditions may find it difficult to have a coordinated approach to their care. There has also been greater recognition of the value of holistic approaches to care and treatment. That’s where hospices come in.

In my next blog I will look at the challenges now facing the hospice movement, with examples from the situation of the Wellington Mary Potter Hospice. 

[1] These blogs have been prompted by my personal experience of the work of hospice, and the Wellington services in particular, over recent weeks.

[2] Jindrich Polivka (2002) The hospice movement: History and current worldwide situation. Archive of Oncology, Vol.10(1):29-32.

[3] In 2006, the United States-based National Hospice and Palliative Care Organization and the United Kingdom’s Help the Hospices commissioned an independent, international study of worldwide palliative care practices. They found that 15% of countries offered palliative care services with integration into major health care institutions, while an additional 35% offered some form of palliative care services, though these might be localised or limited. In 2009, there were an estimated 10,000 programmes internationally intended to provide palliative care, although the term hospice is not always employed to describe such services (Wikipedia).

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Some innovative ideas about Dementia

No, nothing about a miracle cure, just some good ideas about how we may be able to cope with the growing challenge of dementia (until a cure emerges). The majority of recommended interventions for people with dementia are certainly pharmacological, but, increasingly, treatment guidelines recognise the need for psycho-social interventions and acknowledge the importance of relationships and interactions between the person with dementia and others.

Men’s Sheds

The first positive thing I heard about dementia was from a lecture given by Hal Kendig, on the (then) new initiative of Men’s Sheds in Australia. At that time, group meetings were held in actual sheds, moving around the garden sheds on each members’ property. One of the members of this particular group was a man– call him Bob – who had dementia and who had not spoken for many months. The meeting convened in a shed which had photos of sports teams on the walls. Bob went up to one photo and began naming the team members. It had awoken a part of his memory which was previously sealed.

Dementia-friendly cities and communities

Much later, when I was writing about the Age Friendly movement for the Office for Seniors, I found that dementia-friendly cities and communities (DFCC) is a part of this.

The Alzheimer’s Society defines a DFC as “a city, town or village where people with dementia are understood, respected and supported, and confident they can contribute to community life. “

I was especially impressed by the concept of “legibility”; which includes the importance of the outside environment, the character of street networks and the presence of landmarks. People with dementia prefer short, narrow and gently winding streets rather than long, wide or straight streets. The latter have the potential to cause a loss of concentration leading to disorientation.

Different shapes, features and colours and a variety of doors, windows and gardens are useful tools for successful navigation. Practical and decorative items, such as public seating and bus shelters, trees or planters all act as landmarks to help people with dementia to clarify their location and to determine which route they need to take.

Group Singing

Dementia and caring responsibilities can affect spousal relationships, leading to  loss of emotional intimacy, reduced relationship quality and loss of communication. An important aspect in preserving the couple relationship is the idea of doing things together, especially in a social context. A recent study examined how group singing benefits people with dementia and their partners[1]. Some research has suggested that musical memory is preserved above other types of memory. And several studies have reported positive feelings of achievement, belonging, and decreased social isolation through group singing. Singing is frequently perceived to be an activity that most people have had experience of. And singing is an accessible activity regardless of ability level or singing history.

The study noted that, while singing, differences between the people with dementia, facilitators, and caregivers become less important. Participation in group singing brings beneficial sense of belonging to a social group and sharing an experience. A number of those with dementia described increased confidence, for themselves and other members of the group. On their part, caregivers experienced a “release” from caring responsibilities. One caregiver described how “it was something we could do together, where I wasn’t responsible…”  Caregivers also reported that this allowed for equal participation between themselves and their partners.

In one case, reminiscent of the Men’s Shed example, one caregiver began singing a familiar tune to their partner, a person with advanced dementia, who had mostly lost the capacity for speech. But she audibly attempted to join in with the words of the song.

The Restaurant of Mistaken Orders

This restaurant has just opened in Tokyo and it only hires waiters and waitresses with dementia. The staff may get orders wrong but “if you go there knowing that, you won’t dwell on it too much – and it might change your perception about those suffering from the illness”. It also shows that dementia patients can be functioning members of society.  One commentator ordered a hamburger, but dumplings came instead. ‘I’m fine – dumplings came and I had a good laugh.’ [2] One older woman shows her guests to a table and then sat down with them. Another serves a hot coffee with a straw. Yet another older woman struggles to twist a large pepper mill. Everybody at the table pitched in to help, and with cries of “We did it!”

japanse chef

The creator, Shiro Oguni, says “Like everybody else, my awareness of dementia at first tended towards negative images of people who were ‘radically forgetful’ and ‘aimlessly wandering about.’ But actually, they can cook, clean, do laundry, go shopping and do other ‘normal’ things for themselves. The restaurant is not about whether orders are executed correctly or not. The important thing is the interaction with people who have dementia.”

Two out of three Japanese with dementia live at home, conditions conducive to isolation. Many would rather be useful to the community than receive assistance. The restaurant gives them a cheery place to do just that.

 

[1] Shreena Unadkat, Paul M. Camic, Trish Vella-Burrows (2017) Understanding the Experience of Group Singing for Couples Where One Partner Has a Diagnosis of Dementia. The Gerontologist, Volume 57, Issue 3, 1 June 2017, Pages 469–478.

[2]  http://www.mistakenorders.com/en/home.html

 

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How many conditions – and how to manage them?

We ask people regularly – “How are you?” – but generally do not expect a recitation of numerous health problems in reply. But when speaking to an older person, the recitation could be long. Increasing survival into old age is certainly to be celebrated, but increased longevity is often accompanied by multimorbidity, meaning the presence of more than one long-term disorder. It is reported that 65% of people aged 65 to 84, and 82% of people aged at least 85 have two or more chronic conditions (this is in contrast to the presence of multimorbidity in only 14% of 35-44-year olds). Moreover, commensurate with overall population ageing, the proportion of older adults with multimorbidity is growing significantly.  Multimorbidity is linked to functional limitations, cognitive impairment or mental health concerns, as well as interactions between the conditions themselves and their treatments. Clearly, multimorbidity presents a problem to health services, but also to society as a whole.

What conditions go together?

A regular topic in the medical literature is how to define multimorbidity, what conditions go together and how they interact. Chronic respiratory diseases increase with age and are linked to many other diseases due to shared risk factors and immune responses,

Patterns of multimorbidity are more clinically meaningful than the number of conditions. A recent review of patterns of multimorbidity reported that most the frequent pairing observed was hypertension and osteoarthritis, followed by other combinations of cardiovascular conditions. But findings on the most common combinations of diseases are limited. Different methods of analysis will produce different patterns.

Multimorbidity affects Quality of Life

Most chronic conditions are associated with reduced quality of life; conditions such as stroke, depression, and anxiety account for the strongest associations. Current studies show that quality of life and functional status decreases as the number of chronic conditions an older adult has increases. They are more likely to be heavy users of medical consultations and multiple medications. Increasing numbers of chronic conditions place older adults at higher risk of hospitalisation and residential care placement. Their ability to adapt to changes that come with ageing and their efforts to self-manage may be challenged when they have multiple chronic conditions with competing demands, for example when coping with chronic obstructive pulmonary disease (COPD) and diabetes at the same time. Older people with physical and mental health multimorbidity may also find it hard to adhere to prescribed treatments and medication regimes.

How to manage Multimorbidity

“Approaches to the management of multimorbidity lack clarity and specificity” seems to be the conclusion. Managing multimorbidity in primary care – by general practitioners – will be challenging, particularly as regards prescribing of medicines. Often multiple medicines are required – described as polypharmacy.

The challenge here is coordinating care and avoiding fragmentation. Prescribers are often asked to reduce medications because of uncertainty about how they will interact, even though the medications, taken alone, are entirely appropriate. This raises the likelihood of iatrogenic illness – an illness that is caused by a medication or a physician. The literature suggests that inappropriate polypharmacy can be improved with “complex, multifaceted, pharmaceutical care-based interventions.” Easier said than done! Despite recent emphasis on patient-centred approaches, it is going to be hard the individualise treatment in the context of multimorbidity. Another challenge is how to apply single-condition regimes in a multimorbidity context.

An important suggestion is to have someone to ‘connect the dots’ for people with multiple conditions – a core coordinator or case manager. The general practitioner might be the first to spring to mind, but to save the GP’s time, such roles could be effectively undertaken by nurse practitioners, nurses and community social workers as well as unpaid family and friend caregivers or volunteers. The problem with this approach may be the “silo” effect in hospitals and health agencies which can make interaction between different service sectors difficult – working across boundaries to meet the diverse needs of patients – home care, food, social connection as well as medication and therapy. Informal carers may know more about the social context, but not be well up on medical aspects.

Trading Off

Management regimes for multimorbidity (as for all eldercare) require trade-offs and perhaps the most important of these is between safety and independence. While both attributes are important, patient safety is often prioritised over patient independence – increasing safety while restricting independence. Achieving the right balance is difficult both for clinicians and informal caregivers. It often produces guilt and uncertainty about the decisions and actions which need to be made. Caregivers face worry when those they care for wish to do activities that place them at risk.

Applying a multimorbidity approach”[1]

The New Zealand Ministry of Health provides advice, mainly directed at clinicians. This aims:

  • To get the most out of current treatments, considering which alternatives meet people’s needs and goals. – reviewing the pros and cons of medications and other treatments.
  • To consider how a person’s health problems affect their day to day life, their mental health and their wellbeing.
  • To discuss the level of family and whānau involvement people want in any planning and ongoing treatment.
  • To discuss overall benefits of preventative treatments in people with multimorbidity, taking their views of harms and benefits into account.
  • To agree an individualised care plan, identifying who is responsible for care coordination, follow-up regimes, and reviews. And deciding how the plan will be shared across all involved in the person’s care.

[1] https://www.health.govt.nz/our-work/diseases-and-conditions/long-term-conditions/management-multimorbidity

 

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Intergenerational conflict – is it inevitable?

The world has woken up to population ageing as a major issue, but it still tends to be seen as something negative. Terms such as ‘age-quake’, “cataclysm”, “threat, ‘burden’ and ‘grey tsunami’ are bandied about. One journalist said:

The ramifications (of ageing) could be serious as the elderly become an additional burden to the traditional scourges of poverty and disease.

It sounds scary – as if poverty and disease (and not forgetting climate change) were not enough, now we have old people as part of the apocalypse. The implication is that older people are going to eat up more than their fair share of resources, thus depriving oncoming generations. The scene is set for conflict and competition between the generations. Intergenerational solidarity, which was in one of my blogs in early 2013, is under threat.

Younger workers, it is argued, face a large and growing tax burden to pay for superannuation and health care. Although reforms in many developed countries have slowed the growth of expenditure, age-related costs are projected to grow faster than national income in the next few decades.

The New Zealand Treasury expects that, by 2060, there will be four people aged 65 plus for every ten aged between 15 and 64, which is the usual definition of “working age”. That ratio compares with two to ten today. Bringing in dependent children under the age of 15, demographers expect that there will be seven “non-workers” to every ten people aged 15 to 64.  Of course, 15 to 64 is not a realistic “working age group” even now, when the school leaving age is 16, much less in forty years’ time, when workforce participation after age 65 will certainly have grown. But the point is worth considering.

New Zealand Superannuation spending is almost 5% of GDP (Gross National Income) now. This percentage is expected to reach 7-8% by 2060, depending on which estimate you choose. The same kind of increase is projected for health service spending, including residential care. Put another way, today, around 25% of the government’s annual spending goes on services for 13% of the population which is aged 65 plus.  By mid-century, 40% of spending may be for this group, which will then account for 25% of the population.

These estimates raise important questions, especially about inter-generational equity. New Zealand compares favourably with other OECD countries in combating poverty among older people, but our poverty rate among children is higher than the OECD average. How can we reach a balance? How do we make the right choices for the future?

Political and journalistic rhetoric tends to pit the generations against each other, pointing out the growing tax burden and an unenviable legacy of mounting debt or higher taxes.

Perhaps we should think about more intra-generational sharing of the costs of an ageing population. Could the wealthy, younger retired contribute more to the costs of care for the older, low-income and often less healthy, retired? By doing so, the pressure on the working age population could be reduced and intergenerational equity enhanced.

While the very old will continue to need care services, should we think about how the costs of care be shared more equitably? Could advances in information and communication technology help to keep people in their own homes longer, with a mix of family, commercial, voluntary and public sector support?

How can governments maintain income support to provide a good quality of life in retirement without jeopardising financial sustainability? A key solution is longer working lives. Half of the OECD countries are already increasing pension eligibility ages or will do so in the coming years, this being a powerful way to encourage longer working lives (as was the case when eligibility for NZ Superannuation was raised from 60 to 65). Around half of OECD countries’ pension reforms involve greater targeting. How would we react to moving away from the universality of New Zealand Superannuation?

 Our policies should aim to ensure adequate income, health care and support for caregivers across the generations. Older people have an interest in seeing that all children are given good education and health care as this will impact on the society in which their grandchildren will live. Young people have an interest in the availability of good care for their own parents and grandparents.

Policies work in a multi-generational context. We pay taxes to support older people’s superannuation and healthcare costs, but also education systems and maternity services. Governments invest in roads and electricity supply, economic development, job promotion and environmental protection, which help everyone. This works well when the age groups are balanced. This balance looks likely to disappear in future.

There are certainly challenges, but is intergenerational conflict inevitable? May it be more in the mind than in reality? A large-scale survey in OECD countries asked, “Are older people a burden on society?”[1] 85% of people strongly disagreed or somewhat disagreed with the question. Interestingly, it was people aged 55 and over who were most likely to agree!! But this study did not find that conflict between the generations was increasing. The authors concluded that intergenerational conflict is weaker when older people actively participate in the political life and are visible in society. This suggests that policies to promote Active Aging could mitigate intergenerational conflict.

One of our few growing natural resources is older people. How can we provide opportunities for them to make a greater contribution? How can we combat ageism which acts as an obstacle to this aspiration? Action is urgently needed to ensure a fairer re-distribution of resources, responsibility and participation and to develop greater cooperation between generations in all social and economic spheres.

 

 

 

[1] Hess, M, Nauman, E. and Steinkopf, L. (2017) Population Ageing, the Intergenerational Conflict, and Active Ageing Policies – a Multilevel Study of 27 European Countries. Journal of Population ageing. Vol.10, Issue 1, P.11-23.

 

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Home ownership as a status symbol for older people

When social researchers and policy people want to examine trends in their relevant populations they often “dissagregate”, that is separate out groups of people by their characteristics. Thus, we are used to totals by gender, by ethnicity, by age and by socio-economic status. None of these characteristics is clear-cut. You may have noticed that as well as male and female there is often another choice, such as “gender diverse”. Many people have affiliations to more than one ethnic group – so how can we be sure about the proportions of Maori, Pakeha/European and so on.

But, despite this, there are a lot of links between certain population groups and their general experiences, such as health status. Women tend to live longer than men. Maori are more likely to suffer from cardiovascular disease than Pakeha. These differences have significance for policy and service development.

A characteristic which plays a large part in social analysis and which has significant policy implications is socio-economic status (SES) or socio-economic position (SEP), sometimes called class or social advantage/disadvantage. The most commonly used indicators for studying SES are income, occupation and educational qualifications. For example, NZDep is a national index derived from census data, and has indicators of income, employment, education, home ownership, household overcrowding, transport, support and telecommunications. It is applied to geographical areas and is used to pinpoint levels of social deprivation, hence special funding for schools and other services.

But how can the SES of older people (65 plus) be measured when they are no longer in paid work, and who may have their income fixed by national policies? This is a key question which Associate Professor Daniel Exeter and his team at the University of Auckland are exploring as part of their Marsden-Funded project. Older populations are likely to have received limited secondary and tertiary education. The applicability of the usual indicators decreases with age. For example, instead of current occupation, sometimes “last occupation prior to retirement” is used in SES measurements. But this may not be a correct representation of an individual’s main occupational status through life. Prior to full retirement, many older people have less demanding jobs as transitional or as supplementary to a retirement lifestyle.

Is housing tenure a good indicator of socio-economic status?

In her Master’s thesis, Olivia Heatley, one of the Auckland team (supervised by Daniel Exeter and Dr Nichola Shackleton), addresses this question and concludes – “Current measures designed for working age populations do not accurately reflect the position of those adults aged ≥65.”[1] The aim of her thesis was to create a census-based measure of SES in older people in New Zealand and hence to provide a means to help target the distribution of resources to vulnerable older groups – a growing policy challenge as the population ages.

After pointing out how other SES measures may be less appropriate for older people, Olivia discusses using housing tenure. It is regularly collected in major surveys which cover the vast majority of the population.[2] Funds tied up in housing are likely to make up a sizeable proportion of older people’s assets (if not their only asset). As such, they can be a measure of accumulated wealth and can illustrate the cumulative advantage or disadvantage individuals have experienced over time. Research results show that house value is highly associated current health status.

“Housing tenure provides one of the most fundamental bases of financial and social well-being in old age” (Kendig, 1984).

A measure of SES in older people based on housing tenure should distinguish between outright homeowners and those with a mortgage. Mortgage free status brings the benefit of much reduced housing costs. Older people with a mortgage-free home are more likely to find NZS payments sufficient for their weekly expenses.  There also needs to be a distinction between owners and renters (private and public rental accommodation). The ownership of a private dwelling is likely to reflect higher levels of education and income than the situation of those who are still making substantial rental (or mortgage) payments.

A SES (SEP) measure for the older population
Olivia’s research provides a new measure of socio-economic position, dividing the ≥65 population (excluding those in non-private dwellings) into three distinct groups: low, medium and high socioeconomic position (SEP).

Low SEP – The main marker of low SEP is living in public rental accommodation, but also people renting privately and owning a home with a mortgage.

Medium SEP – Represents those who may not be wealthy but are still in a stable financial position. They may still be homeowners with a mortgage or renters, but a series of further financial indicators must come into the assessment.

High SEP – The main marker of high SEP is a mortgage free home. Literature surrounding housing tenure and owner occupation consistently shows better health outcomes for those who own their home compared to other tenure arrangements.

On this basis, 20% of older people can be classified as in low SEP; 59% in medium SEP; 22 % in high SEP. This is a very simplified outline of the proposal but does suggest the importance of housing tenure to the wellbeing of the older population.

As part of the Marsden Funded project, the Auckland team are producing a preliminary Older People’s Index of Multiple Deprivation (OPIMD) which uses 15 indicators of deprivation reflecting the social conditions of the 65 plus population.

[1] Healey, O. R. (2018). The Forgotten Generation: Creating a census-based measure of socioeconomic position (SEP) for the ≥65 population The University of Auckland. ResearchSpace@Auckland.

[2] It does, however, exclude older people living in institutional care.

 

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Older People and Kiwi Saver

2019 Review of Retirement Income Policy

The review’s terms of reference make several references to KiwiSaver. Given the growing number of older people and longer lives, KiwiSaver is (and will be) an important part of retirement income plans.

The review was asked to assess what impact KiwiSaver (KS) would have on retirement income policies, along with the public’s perception and understanding of KiwiSaver fees, their levels and types and the range of KiwiSaver funds available.

Some light in these issues comes from a survey carried out by the Commission for Financial Capability (CFFC) in April 2019. This included a sample of 2000 people and asked them the reasons why they were not in KS. The oldest age group covered was 50-65 – people coming up to the, then, age cut-off (65) for KS membership. The answers for this age group were –

Have other savings/investments that will secure a comfortable retirement:  28.9%*

Can’t afford it:  24.5%*

Afraid Government will change the rules to the disadvantage of KiwiSaver members:      13.3%

Fees are too high: 6.4%

People aged 50-65 gave the highest percentages for these four reasons. The reasons marked * were the leading ones for all age groups, excluding people who had no income or who had never been employed.

People in younger age groups were more likely to say that they didn’t feel comfortable with the risk inherent in KS. Overall a quarter of the respondents had some fears about the future of the scheme and the risks involved. And 20%, mainly in the younger age groups, felt that they did not know enough about KS.

2019 Changes

Ahead of the outcomes of the review, some changes to KS, which affect older people, came into effect on July 1th. From this date people aged 60 plus became eligible to join or to continue in KS, but employer contributions were not compulsory for them (although it appears the majority of employers are making these contributions). People who join KS aged between 60 and 65 are no longer locked into the scheme for five years but can still withdraw their funds at 65.[1] These changes, and other commentaries on the policy review, recognise growing paid workforce participation by people aged 65 plus.

 Choices to make when KS schemes mature

People reaching age 65 can now decide whether to take their KS lump sum then and reinvest elsewhere or remain in the scheme and continue to contribute to increase their final draw down. The details of post-65 arrangements will vary by KS provider.

“Smart Investor” (https://smartinvestor.sorted.org.nz/) compares the percentage costs between KiwiSaver and other managed funds

Type of scheme          KiwiSaver highest    Other managed funds highest

Conservative                           1.65%                          2.43%

Balanced                                 2.60%                          3.49%

Growth                                    2.23%                          4.36%

This may be a rough and generalised comparison, but it appears to show that KS schemes have lower costs than other managed funds, and, thus, there are advantages for older people to remain in KS after age 65. The commentators suggest that the over-65s had been stuck with higher-priced options by being excluded from KiwiSaver (depending on the individual fund chosen).

Prospects for Retirement Incomes

At the Retirement Policy Research Centre’s “Summit” in Auckland in April, as well as the contributors I have quoted from above, Alex McKenzie from the MSD gave his views on present and future prospects. [2]

He concluded that older New Zealanders are currently doing relatively well, with low rates of income poverty and material hardship relative to other age groups; high rates of home ownership; and a growing economic contribution (as workers, volunteers, taxpayers, investors and consumers). KS is an excellent mechanism for saving, but its impact on future retirement incomes is uncertain. Those that will really need it are probably less likely to be saving, or not saving sufficient.

He pointed out emerging trends that point towards a future with an increasing number of older people who may not be doing so well. Trends point towards a future where the rate of income poverty and material hardship amongst older New Zealanders may be higher than they are now, with the great majority very dependent on NZS and other government transfers for their income, especially if they are not part of KS schemes.

People now in their 50s and early 60s experiencing poor health, financial hardship, poor or inappropriate housing and social isolation, have poor prospects for their older years. He suggests that housing will be a key driver. Those without a mortgage-free home will face an increased likelihood of having an inadequate income (after housing costs). People now aged 45 to 64, living on their own, have the second highest rate of income poverty after sole parents. This percentage has grown from 10% in 1988 to 23% in the early 2000s and is now 29%.

This all suggests that more and more people will need to work beyond pension age, despite a number of barriers, including negative attitudes from some employers and others and the possibility of increasing health issues. What are the implications for the role of KiwiSaver?

 

[1] Troy Churton – Ageing workers, workplace participation and KiwiSaver, RPRC PPI Summit: 2019 Retirement Income Policy Review and You, proceedings.

[2] Older New Zealanders: Some Emerging Trends Alex McKenzie Ministry of Social Development RPRC Summit: The 2019 Retirement Income Policy Review & You 26 April 2019

 

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How can local authorities help older people with housing costs?

Two reports, one from the Productivity Commission and one from Local Government New Zealand, have recently looked at the functions of local government and how these might change to become more efficient and responsive to local needs[1]. This is an important question, but here I want to narrow my focus to look at local authorities in their role of assisting older people with housing costs.

The Rates Rebate Scheme (RR)

This was introduced in 1973, designed to assist low-income and older ratepayers/homeowners having difficulty with housing costs. The maximum RR is $630 a year but the amount granted

depends on income and the level of rates. A single person with New Zealand Superannuation (NZS) as their only income will be eligible for the full rebate if their total yearly rates are $1,050 or higher. A couple with only NZS will get a full rebate if their rates bill is $3,450 or higher. The RRS is not subject to an asset test.

In 2018, the Government amended the Rates Rebate Act 1973 to provide RSS eligibility for residents in licence-to-occupy retirement villages.

The number of RR recipients peaked in 2011 at over 115,000. Since then the total has declined, to 98,000 households in 2017, when 78% were households of New Zealand superannuitants. The decline is related to the fact that the income abatement threshold has not kept pace with increases in the value of NZS payments.

There are other issues which may have reduced the uptake of the RR. One is a cumbersome application process. Ratepayers must apply, generally in person, to their council to receive the rebate and submit a statutory declaration about their income and family composition (often every year). Although ratepayers apply to their local council, central government provides the rebate through the Department of Internal Affairs.

In addition, the RR provides a very small dollar amount (the maximum rate is just over $12 a week) and people on higher incomes may not bother to apply for it. There have been many calls for an increase in the rebate and for it to be indexed to inflation. It is hard to assess at any point in time just how many older people might be eligible.

Overall the RR does provide a means for older homeowners on low incomes meet their rates bills without eating too far into their day-to-day incomes. Many have large rates bills due to the rapidly increasing value of their properties. However, older mortgage-free homeowners are not the group likely to be experiencing the greatest material hardship. The rebate may be seen as inequitable as it is not available to renters who are likely to be worse off financially than homeowners. And owners have access to home equity which could be mobilised to help with housing costs.


Other ways to give assistance

 Local authorities can use other methods to help older people with housing costs. Some add to the RR, for example Kāpiti Coast District Council supplements the RR with additional assistance of up to $350 a year, targeted to the neediest ratepayers.

The Local Government Act allows local authorities to develop a rates remission policy which may waive penalties for late or non-payment of rates.

Rates postponement, under the same legislation, is when a local authority agrees to delay the date of rates payment until a specified time or a specific event occurs, such as the sale of the property. This can help ratepayers who are asset rich and cash poor. Some councils offer postponement of rates for older people if they choose to let their rates be paid out of their estate when they die, or when their property is sold. This is a form of equity release (see my blogs in mid 2014). However, councils may not be keen on this form of assistance as it delays the time when they will receive the rating funds, often by many years.

 

Can rates postponement schemes be improved?

Each council is responsible for its own rates postponement arrangements, if they have them, and these vary greatly. Financial firms have offered reverse mortgages for many years and payment of rates may have been among the uses, of the funds released. Yet the reluctance to take up reverse mortgages is at least partly due to perceived high fees and doubts about the security of the arrangements. The Commission suggests that improved arrangements on a national basis, based on similar principles, could reduce the problems and lead to greater acceptance of rates postponement.

Potential customers are likely to be more attracted to a nationally recognised product designed specifically to facilitate rates postponement and offered by a well-trusted public or private financial entity. A single provider (or a few large providers) are more likely to have sufficient scale to support moderate fees.

The Commission concludes that the RRS should be phased out. Central and local government should collaborate with suitable financial providers to develop, implement and promote an improved scheme. It will be worth following the progress (or otherwise) of this proposal.

 

 

 

 

 

 

[1] Productivity Commission, (2019) Local government funding and financing: Draft report.  Wellington. http://www.productivity.govt.nz

Local Government New Zealand (2019) Reinvigorating local democracy: The case for localising power and decision-making to councils and communities. http://www.localism.nz

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