BRUSSELS, 8 April 2021 – Older people in Europe face an array of barriers when trying to access basic financial tools that keep them in the financial wilderness, says a new report by Finance Watch.
Titled “A Wrinkle in the Process: Financial Inclusion Barriers in an Ageing Europe” and written by Finance Watch researcher Emily Glantz with co-author Paul Fox, the study shows how age limits, digitalisation, as well as poverty or low income form the main barriers impacting access of older people to a basic package of financial tools and services. That package includes cash, a payments account, savings account, a safe third-pillar pension product, motor insurance, health insurance, home insurance and personal liability insurance.
Defined as people at or beyond 55 years of age, older people make up more than a third of Europe’s population, with this age bracket set to climb beyond 40% by 2050. Those in the 65-plus age category make up one-fifth of the EU population. Those over 55 oftentimes lack digital skills, own a smartphone device or have access to the internet. On health and social traits, they are also more likely to live remotely, with an impairment, illness and reduced mobility. In 2019, 16.1 percent of those above 60, or 19.1 million people, found themselves at risk of poverty or social exclusion, up from 15.5 million in 2011.
A confluence of an ageing Europe and a digital ‘New Normal’ financial tech boom occurs at different rates across EU member states, providing a long-term worry for society as well as policymakers, who seek political support from this active voting bloc.
Glantz says: “The current financial landscape puts older people at risk of exclusion. Going forward, society and policymakers alike must take into consideration how digitalisation, age limits, low incomes and gender imparity affect financial inclusion outcomes in the pre-retirement and retirement stages of life.”
Lowering barriers face push back
Efforts to slash barriers face pushback from critics who say the digital divide is a temporary problem and that efforts to keep brick-and-mortar access keeps Europe from being future oriented. Branch closures continue as lower-cost banking proliferates via online and mobile. But keeping bricks along with clicks – along with addressing other barriers – can have knock-on effects such as a larger base of people being served, including the vulnerable who depend on cash frameworks and offices.
Strengthening rights of older people
Policies at EU level can strengthen the rights of older persons so they enjoy autonomy, protection and a sense of belonging regardless of age. The horizontal non-discrimination directive put on ice in 2008 stifled opportunities to combat age discrimination outside of employment. The authors argue to reconsider age limits for mortgages that prevent home ownership as young as 55 or 60. Policy must also address high insurance rates based on age alone that can hamper protection for older households. Lack of products for low-income people also holds back access. The authors urge full implementation of the UN Convention on the Rights of Persons with Disabilities (CRPD) and a resurrection of the horizontal directive. On the digital front, EU Member States must shore up a persistent lack of financial and legal support from some Member States for assistive technologies.
Glantz added: “While some argue there are enough rules protecting older people, they fall short. Older people can face circumstances that make them further vulnerable to exclusion, discrimination or exploitation. Anti-age-discrimination legislation beyond employment and full implementation of the CRPD can help, such as expanding assistive technology classification to include ‘disability inclusive’ safeguards against market forces and precludes exclusion.”
Focus on product, services, pensions
On the supply side, the authors urge more focus on making products, services and welfare structures suitable to serve the population that uses them. They cite how 60% of respondents to a Finance Watch EU-wide survey did not consider their public pension schemes as adequate to live a dignified life, as they are entitled to in Article 25 of the EU Charter. Women who responded to the survey were more likely to have inadequate pensions and thereby limited access to other financial tools due to limited support in care credits, childcare and persistent gender discrimination. Survey data also point to supplementary pensions, private health insurances and safe credit products as all too often unaffordable.
While industry voices and policy circles see more digital and financial literacy solutions as the cure for older people in overcoming barriers to financial inclusion, they will fall short. As the financial landscape becomes increasingly complex, the onus cannot be on people to defend themselves against complicated or even predatory products, the report notes. This point is crucial given that the cognitive ability to adapt to new technology falls in older age. Simple, affordable products and interfaces lead to improved usability and access for other groups.
Glantz concluded: “Findings and recommendations contained in the paper pinpoint and provide solutions for pressing demand-side financial barriers. At the same time, we uncover an urgent need for strengthened rights for older people as a matter of social justice, equality and human dignity.”