MOST people do not think of their long-term care in the retirement years or what will happen if they get a debilitating disease like Alzheimer’s or suffer a stroke and can’t take care of themselves. The assumption is that family members will care for them.
That is a heavy responsibility to place on anyone’s shoulders, especially family who may not have the resources or the clarity of mind to decide wisely at that point.
Imagine, if you could write your end-of-life wishes – who you want to stay with, or where and how you should be taken care of – and set aside the money for that sole purpose?
That’s exactly what you can do now through CareTRUST™, a living trust where your money is set aside to ensure the provison of continuum care for your long-term retirement years.
CareTRUST™ is the result of a collaboration between care services company Managedcare Sdn Bhd, finance solutions provider Kenanga Investment Bank Bhd, and wills and trust advisors Rockwills Trustee Bhd.
At the Collaboration Agreement signing between the three parties recently, Carol Yip, CEO of Managedcare, said that the innovative product addresses the ageing demographic and provides the public with an effective solution through the administration of care.
She explained that Malaysia’s ageing population is growing while the family unit is getting smaller and the pressure is great for families to deliver the necessary care to elderly parents.
“We really need purpose-built infrastructure to ensure that there is sufficient money to pay for all these services,” said Yip, explaining that it took 1½ years to bring CareTRUST™ to fruition.
“It is not a unit trust fund. It is actually a living trust. You document how you want to be cared for, you put the money into the trust and we will manage it for your care needs. The aim is actually to address the financial sustainability issue such as longevity risk, medical inflation, cost of care, and insufficient savings because of high cost of living,” she added.
Ismitz Matthew De Alwis, executive director and CEO of Kenanga Investors, said that post-retirement can be scary because most people live longer these days.
“There is at least a good 20 years after retirement. There are three stages: the first where you enjoy retirement; the second stage is where your ‘engine’ needs some check-ups or an ‘overhaul’; and the third stage where you may be bedridden. We must be able to ensure that our retirement funding is sustainable through these three phases,” said De Alwis.
According to him, one of the aims of CareTRUST™ is to give clients peace of mind knowing that when they do their retirement planning, a part of their money is being channelled towards their aged care needs. If anything happens to them, they will have some funds to take care of their healthcare needs.
“A will is something that comes into effect once you have gone six feet under. A living trust is something that is carried out while you are still alive. It could be when you suffer a stroke or get dementia,” said De Alwis.
This is how it works:
The client shares their wishes for care in their long-term post-retirement days. Alternatively, a parent may share their wishes for a special needs child or an adult child may share their wishes for their elderly parent’s care.
Managedcare then comes up with a care plan. If there is a need for a nursing home immediately, then the company would start looking at all the homes that suit the client’s criteria and come up with a list of options. Being in the aged care industry themselves, Managedcare would have all the information in its database and finding a suitable home would be easier than if the client were to try to find a suitable home by themselves.
The client then sets aside some money towards their long-term care. The money is put into CareTRUST™ and managed by the KenWealth platform, under Kenanga.
The money would go into one of Kenanga’s money market products on the KenWealth platform which is very low on risks.
However, if the client is younger and can take a higher risk, then they might speak to a KenWealth advisor on putting their money into one of its other products which offers higher returns. The returns would go towards their retirement care plan.
KenWealth represents multiple companies. At the moment there are 12 partners for unit trust, 7 PRS providers and 4 or 5 insurance companies on the platform.
Managedcare functions as the care administrator. This means that if the elderly person is already in a nursing home, Managedcare will ensure the healthcare and care provisions are met. When money is needed for the care, Managedcare will inform Rockwills, who will see to it that the bills are paid using the money in the client’s KenWealth account.
This would also assist the elderly who are not mobile and find it inconvenient to visit the bank to sort out payment for their care.
Rockwills would provide Managedcare with quarterly reports on how much money is still in the client’s account.
Rockwills and Managedcare will work very closely. If anything changes (for example, the client has a new medical condition) and the client needs more money, then Rockwills will communicate with the client, and Kenanga’s services will be sought to help find a financial solution for them.
At no point would Managedcare, KenWealth or Rockwills be making decisions on behalf of the client. Each client should have a “protector”, most often a family member, to decide for them should they no longer be fit or capable of making decisions. Each client would also have a beneficiary, to whom the remaining money in the trust would be disbursed to should the client pass on.
“As care administrator, Managedcare will be responsible to ensure that the quality of care received is in sync with the client’s health and long-term care, and that will also go from long-term care to end-of-life care. We will co-ordinate and administer a variety of healthcare and care provisions to meet the needs of the client,” said Yip.
Azhar Iskandar Hew, deputy CEO of Rockwills, said that as the independent trustee, Rockwills will hold the money and have the custodial rights to manage the funds.
“Part of being a trustee is to safeguard the client’s interests and at the same time, together with Managedcare, we will help the client to manage the money so that it will last for as long as possible,” he added.
CareTRUST™ is the first of its kind in the Malaysian market.
Kenanga’s Ismitz noted that as Malaysia is an ageing country, the time is right for CareTRUST™.
“This collaboration marks a new milestone for the retirement and aged care industry to fulfil the need for an integrated financial and healthcare framework, especially for the ageing population. CareTRUST™ will encourage Malaysians to sustain a decent post-retirement lifestyle and sufficient funding for their long-term care needs.
“As an ageing population, the imminent growth of the retirement and aged care industry makes it an attractive endeavour which offers tangible opportunities to both individuals and corporates.
“To build this sustainable aged care infrastructure will require the help of many hands – government policy makers, healthcare institutions, entrepreneurs, education institutions, and financial institutions. These stakeholders are all part of the entire funding value chain from the generation of the idea to putting the brick and mortar of all these ideas together,” he said.
Managedcare, Kenanga and Rockwills hope that their product will spur a catalytic change in Malaysia’s aged care and retirement industry, to elevate it to be on par with regional countries.
They believe that CareTRUST™ can be used to add value to other industries such as property development, nursing care, healthcare and finance.
De Alwis said that response to CareTRUST™ has been favourable so far and he expects it will take off in 3-5 years.
“As with anything new, it will take some time. Hopefully we will continue in our efforts. We want corporations to get involved in this retirement industry and to support this overall ecosystem,” he said.
Photo: At the CareTRUST™ Collaboration Agreement signing ceremony: (From left) Carol Yip, CEO of Managedcare; Datuk Frank Choo, Aged Care Group’s managing director; Ismitz Matthew De Alwis, executive director and CEO of Kenanga Investors; and Azhar Iskandar Hew, deputy CEO of Rockwills.