UK / Europe — 04 July 2011
Pensions and Social Care for the Elderly: Trying to Square the Circle

The concerns in Britain about changes to the pension arrangements for public employees has now been joined with the reprisal of a debate about how to cost social care for the elderly.

The various ideas floated as suggested changes to the system are nothing less than trying to make an unworkable system work. Politicians trying to square the circle of elderly care and pension provision have to reconcile almost irreconcilable competing forces: a) funding rising costs for an ageing population, with a rising life expectancy and rising rates of dementia; b) the need to reduce the nation’s budget deficit; c) making a system designed over 60 years ago work in an age where society’s values have changed dramatically. The cost of keeping the system is huge. The cost of abandoning the system is unthinkable, as society simply doesn’t have the safety nets to help these people.

Islam views the challenge of caring for the elderly in a totally different way in terms of the values it builds in society, and point at which the state intervenes.

The problem of pensions

Last week public sector workers went on strike because of fears to changes to their pensions. Proposals have been made to increase the age at which a pension can be claimed as well as to reduce the salary from a final salary scheme to one based on average earnings.

There is an argument that private sector pensions have lost value in the past few years having been affected by the turbulence of the stock markets and mismanagement of pension funds – hence, public sector workers cannot expect other taxpayers to subsidise theirs as they had before.

Moreover, it is argued, Britain has a record budget deficit that needs tackling; and previously floated ideas to raise the pension age had to be accelerated to help in balancing the budget.But so far, the attempts by politicians to present reasoned arguments for this have not assuaged the sense of injustice felt by public sector workers who recall that the government spent £850bn of public money to bail out private banks.

The rising cost of social care

Councils spend more than £14bn a year on social care – the equivalent of about half of all their expenditure. The system of social care was one that was supposed to have a cross party consensus before any changes were introduced. That was before the election when the Conservative party decided to score political points off the issue. Now, the Conservative-led coalition government is faced with the same dilemma as its predecessor – an ageing population; longer life-expectancy; rising rates of dementia; and a limited budget.

Over the next 20 years, the numbers needing care are predicted to rise from just under 6m to 7.6m. The problem has been significantly complicated by issues affecting private sector providers. Apart from the horrific cases of abuse at care homes, some have had financial problems of their own. Southern Cross Healthcare, a private provider of health and social care services for the elderly and some younger people is the largest provider of care homes and long term care beds in the UK. Its shares fell 98% from early 2008 to early 2011, threatening its viability, after its annual rent bill became unaffordable (it had sold of the leases to its properties prior to the 2008 financial crisis to fund expansion of the business).

Under the current system, the support provided by councils is means-tested  – anyone with assets of more than £23,250 has to pay for all the cost of their care. It is estimated about 20,000 people a year have to sell their homes to pay for care. There is a new recommendation that the limit be set at £100 000 after which people be expected to pay fully for their care; and that even then there be a cap for a maximum anyone would have to pay at £35 000.

There have been suggestions ranging from a death tax, raising general tax and looking at other ways to fund this extra amount.

It is possible that the route to funding social care for the elderly will be based on some kind of insurance scheme. Industry experts estimate that a typical 50 year-old could buy insurance for care costs of up to £50,000 with a one-off premium payment of about £17,000. If this were the case one could be sure that private insurance companies will make a healthy profit but given the past track record of the past on insurance and pensions, one could never be sure that the expected value would be retained at the time the payment for care is need.

Social care in figures

  • About 1.8m people get state-funded social care – a third of them adults with disabilities and the remainder are the elderly
  • Nearly 500,000 people are paying their own costs
  • Another 800,000 are estimated to go without formal care despite being in need of help
  • The average lifetime cost of care is £30,000, but for one in 10 it will total £100,000
  • More than £14bn is spent on social care by councils
  • But once inflation is taken into account funding has hardly changed in the past seven years
  • Over the next 20 years the number of over 70-year-olds will jump by 50% in the next 20 years to top 9.6m, according to the Office for National Statistics.

[Source: BBC]


Some additional complicating factors

Writing in the Daily Telegraph, the political commentator Peter Oborne said that in addition to the demographic changes ‘There was a second, crucial factor, also unforeseen at the time: the collapse of the traditional family. Go back 60 years and divorce was almost unknown, births outside marriage quite rare. Indeed, the Beveridge Report made the explicit assumption that, with the war over, married women would return to their homes and concentrate on what Sir William viewed as their most important task – “to ensure the continuation of the British race, which at its present rate of reproduction cannot continue”.’

Britain has undergone a social revolution in the last century. Marriage has declined; more of those marriages that do occur break up more frequently. Market forces driving movement in order to pursue jobs has meant elderly people can live at some distance from their children. Individualism has grown – most dramatically since the 1980s.

In such a society, the elderly are seen as a burden; and when the safety net of family is no longer there, either the state or the private individual themselves has to take on the responsibility of funding and delivering care.

Islam, the elderly, pensions and social care

Islam tackles these issues completely differently. Universal pensions and state funded social care are noble aspirations. But it is increasingly apparent that they are unsustainable.

This is because, as we have implied before, they are trying to compensate for much deeper changes in social attitudes and the structure of society – not merely a system for funding care for the elderly in need.

There are three major factors that underpin the Islamic approach:

1.            Society’s attitude towards parents and the elderly

2.            The family as the fundamental building block of society

3.            The state fulfilling a person’s needs if there is no alternative [i.e. there is no family, or the family are unable to meet the demands]

Society’s attitude towards parents and the elderly

These are shaped by the Islamic texts. The rights of parents are often mentioned after Allah’s Right to be worshipped.

And your Lord has decreed that you worship none but Him. And that you be dutiful to your parents. If one of them or both of them attain old age in your life, say not to them ‘Uff’ (a word of disrespect), nor shout at them, but address them in terms of honour. And lower unto them the wing of submission and humility through mercy, and say: ‘My Lord! Bestow on them Your Mercy as they did bring me up when I was young.’”The Qur’an [Chapter 17: v23–24]

By addressing parents in this way Islam teaches people that, just as our parents were patient with the dependencies and idiosyncrasies of children in their early years, we should be patient with their dependencies and idiosyncrasies as they age. It is a beautiful reminder of the cyclical nature of life.

Moreover, the motivation given by Islam to care for the elderly is of the highest order. It is not financial – in the hope that a person inherits their home rather than selling it off to pay for social care. It is linked to accountability in the Hereafter and has a spiritual significance in the same manner as prayer and fasting.

One of the companions of the Prophet Muhammad (peace be upon him) narrated in that he said: “‘May he be disgraced! May he be disgraced! May he be disgraced.’ It was said, ‘Who, O Messenger of Allah?’ He said, ‘The person whose parents, one or both of them, reach old age during his lifetime but he does not enter Paradise (by rendering the services due to them).’”

Thus the primary responsibility for care of the elderly falls on their offspring and other relatives.

And the potency with which this is addressed in numerous Islamic texts is such that someone who was perceived to be neglecting their parents is seen as a social pariah.

The family as the fundamental building block of society

Many Islamic laws centre on strengthening the family. There is a huge encouragement to marry and have children; to keep ties with relatives. There is a stern prohibition on breaking ties of kinship – most especially with ones’ parents. These rules go beyond religious divides i.e. a Muslim who had non-Muslim relatives still must fulfill these duties.

Whilst the legal responsibility for care and provision usually rests with the individual themselves [i.e. first of all they should make effort to secure their own livelihood], in circumstances where they are not capable of undertaking this, then their immediate family bear this duty and then relatives further on.

This is exemplified by the narration in which he stated:

“If any one of you is poor let him start with himself (i.e. provision) and if any one of you has surplus (wealth) let him spend on his family, and if any of you has further surplus let him spend it on his relatives.”

From this narration and others like it, it is understood by Islamic scholars that there is a clear order of priority in terms of the financial obligation to provide care and maintenance. The individual is responsible first of all for himself, then his immediate family, and then further on to other relatives.

The relatives who should bear this burden of provision have been outlined in the Qur’an, the Book of Allah, where it is stated:

“…But the father of the child shall bear the cost of the mother’s food and clothing on a reasonable basis. No person shall have a burden placed on him greater than he can bear. No mother shall be treated unfairly on account of her child, nor a father on account of his child. And on the (father’s) heir is incumbent the like of that (which was incumbent on the father).”The Qur’an Chapter 2, v. 233

The ruling outlined in this verse of the Qur’an addresses some of the issues related to the maintenance of the wife and child by the father after divorce. When the father is incapable or not present to provide the necessary financial support, the duty is transferred to his inheritors (the rules of inheritance are also outlined and fixed in the Qur’an).

The list of potential inheritors are thus understood to bear a linked financial responsibility to the person they inherit from, so that they must fulfill his financial responsibilities in his place.

Similarly, if the people from whom one is in a position to inherit, such as the parent, cannot care for themselves, the inheritor must undertake this for them.

From these and other evidences, Islam has laid out a financial network of support that is based primarily upon the family, and within that structure, whichever relatives are capable must undertake the burden without recourse to the state.

If there are relatives who are capable but unwilling to fulfill this duty then they would be compelled to undertake it by the state – in much the same way that a state in the West enforces maintenance payments in divorce cases.

The state as the ultimate guarantor of security and welfare

There may be cases where a relative is unbothered by their social reputation or the spiritual consequences of neglecting their duty and may be able to evade their responsibility by fraudulent means.  There may also be no surviving relatives to provide support; or those alive may be in need of support themselves, or have to support too many others.

In any of these situations, the state must step in to provide care for those in need. However, the manner in which it raises the necessary funds must be undertaken from appropriate sources.

The narration of the Prophet Muhammad that says: “Start with yourself and make charity for it, and if anything is left give it to your (immediate) family, and if anything is left after that give it to your relatives, and if anything is left after that, do it like such and such, i.e. in front of you, to your right hand and your left hand” gives a particular order of responsibility of provision that expands outwards. After the relatives, family and the individual have been provided for, the general duty to provide for others begins.

This is significant as it indicates that the government should tax the general public from their excess wealth, not from the wealth that should go first to the close or distant relatives.

So the funding that would underpin an Islamic benefit system would have to come from wealth taxes that duly reflect the extent to which people need first to support their family, young and old.

Thus, taxes, such as income tax and VAT, which affect the working poor disproportionately, would not be levied. More effort would be focused on drawing taxation from wealthy citizens who are more than capable of providing for themselves and their families.

Trying remedies to this problem by tweaking taxes and policies won’t work. It is not a managerial issue that merely requires better handling. This problem is rather a product of the core values that have been embraced by this society.

Islam presents a radically alternative viewpoint towards family and society that offers an answer to the problems facing the elderly in the UK and the developed western world as a whole.

Dr. Abdul Wahid is a regular contributor to New Civilisation. He is currently the Chairman of the UK-Executive Committee of Hizb ut-Tahrir in Britain. Other Articles by this Author can be found here

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