• Bruce Cameron

Dementia: Heartbreaking, sad… and also a major financial problem

Dementia is a major threat to all pensioners. And then we have Covid-19 pandemic, which is a particular threat to the elderly, and all the other health issues that inflict the aged.

It is important that this column is read by both parents and their children. The problems of dementia, including Alzheimer’s disease, are:

  • Costs: The treatment of serious illnesses, including dementia, can be long and drawn out, costing a lot of money. Frail care can cost up to R40,000 a month, in addition to the cost of medicine, nappies and medical aid contributions. Frail care and home care are only covered on the top medical aid options, and there are rand limits.

  • Scams: Pensioners are subject to more scams than any other group, particularly when they are of failing mind.

  • General rips-offs: There is often a problem being a pensioner – people talk down to you. It doesn’t matter who you are. They will not explain things properly or will try to pass off a higher-priced item on to you. Medical aid schemes are also notorious for trying to reject claims of the elderly. The government has passed legislation to protect the elderly, but there does not seem to be much in the way of compliance. It is not a problem just here, but around the world. You can see what has happened in old-age centres where people have been left unattended with Covid-19, and where there have been very high rates of infection or death.

The scams

Scams where pensioners are taken to the cleaners come from a variety of sources and for different reasons.

  • Pensioners are often desperate for better returns. Consider that the average replacement ratio of a pension is only about 20%, according to research done by the country’s biggest retirement fund administrator, Alexander Forbes. A replacement ratio is the percentage by which your retirement income will replace your final salary.

  • Serious illnesses, with dementia being the top of the list, makes people even more vulnerable. The scamsters come from almost anywhere. They include:

  • Product providers. The biggest scam, pulled mainly on pensioners, was property syndications, sold during the 90s and the early parts of this millennium. Billions of rands were in effect stolen from pensioners under the guise that these were low-risk investments. There are many other scams. The list goes on forever with investment in fictitious goldmines, with names like Eldorado, to currency trading, to pyramid Ponzi schemes.

  • Some financial advisers who have sold purely on maximum commission, such as property syndications.

  • Scams from other professionals, such as some lawyers or accountants, come in various forms, from passing accounts of major sleaze companies through to allowing over-charging and general malpractice.

  • It is amazing how relatives, even close relatives, will move on someone who they think is vulnerable, particularly if the relative is short of cash.

  • Over the years there have always been cases where caregivers manage to get wills altered by various, often devious means.

(This does not mean all are involved. Most people are very honest and treat pensioners well. The trouble is you always have the hard men everywhere, from gangsters to con artists)

The Catch-22 of dementia

Your financial well-being in retirement depends on your being able to make decisions, to contract and to litigate, either independently or with the assistance of others. So, what happens when you no longer have this ability? The answer: You become a danger to yourself.

The law requires that you must be able to understand the nature, purpose and consequences of your actions. If you are not able to understand what you are doing, then any contractual decision is invalid in law.

But it is not quite so simple. There are still several problems: