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Cost-Free LTC Model Incorporated into Private Pension Schemes

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  • J. Iñaki De La Peña

    (Faculty of Business and Economics, University of the Basque Country, 48015 Bilbao, Spain)

  • M. Cristina Fernández-Ramos

    (Department of Education, Junta Castilla-León, 47011 Valladolid, Spain)

  • Asier Garayeta

    (Faculty of Business and Economics, University of the Basque Country, 48015 Bilbao, Spain)

Abstract

Long-term care coverage is not integrated into an individual’s retirement strategy. It is an additional public health service that is not considered into private pension funds. Nevertheless, this coverage is not sufficient due to the problems of financial sustainability of the public pension systems. However, there are large sums in pension plans dedicated to paying retirement pensions that can be transformed into support for long-term care coverage. This paper develops a mechanism of pension transformation through the different mortality of the beneficiary when becoming a dependent beneficiary. This mechanism allows the beneficiary to convert their pension to LTC support at their own choice, without increasing the cost of the private pension scheme. The proposed model provides consistency in the pension that a retiree receives and adapts it to a retiree’s life expectancy: the retiree receives a higher pension when he/she needs it most.

Suggested Citation

  • J. Iñaki De La Peña & M. Cristina Fernández-Ramos & Asier Garayeta, 2021. "Cost-Free LTC Model Incorporated into Private Pension Schemes," IJERPH, MDPI, vol. 18(5), pages 1-16, February.
    • Handle: RePEc:gam:jijerp:v:18:y:2021:i:5:p:2268-:d:505610
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