Pensium: a solution for dependent older adults

Demographic data indicates a progressive increase in the average life expectancy of the Spanish population. This increase in average lifespan, which in itself is good news, means that many people will reach an age at which their personal autonomy is reduced and they need help and support for day-to-day activities.

Although the cost of dependent care in Spain is competitive, it may be beyond the reach of the average dependent person’s pension. This situation generates stress in families and a lot of uncertainty about the future.

Pensium helps seniors to obtain the resources they need to pay for the care they require, thanks to owning their own home.

To find out all the details about this winning initiative in the Insurance Innovation category from the third edition of the Fundación MAPFRE Social Innovation Awards, we talked to Miquel Perdiguer, CEO of the company.

How did Pensium come about?

It really started about 15 years ago, although I did not know it at the time. Through an association for the relatives of Alzheimer’s sufferers, I learned about a specific case that made me ask myself a question: are there really families who have to sell their homes to pay for the care of dependent people?

Ten years later, together with my fellow Pensium co-founders, David Igual, Josep Fabregat and Ramon Lluís García Torner, who enthusiastically came on board from the very beginning and without whom this would have been impossible, we designed a solution to this problem that would in no way compromise home ownership, with no need for guarantees or small print.

Pensium was set up after in-depth financial, legal and social work, and, little by little, thanks to the help of many organizations and individuals, it has become a reality within the reach of all Spanish families with dependent people who need care and who have a rentable property.

What is your approach?

We help dependent people and their families to cope with the care they need. While older people live with their partners, they help each other and, with some external resources, they get by, but when one is left alone and the dependency worsens, that is when there is a need for professional care.

It is at that moment, when the person is in a situation of dependency, that they realize that 24×7 services, whether at home or in a nursing home, have a cost that is difficult to cover with a pension. And there are not enough public places for everyone.

That’s when we can help them. We offer to fix up the house, put it up for rent and we guarantee up to double the rent, whether it is rented out or not. So you can rest assured that you will be able to pay for your care without being a burden to anyone, without selling your house and without risking your home with mortgages.

What makes you unique or different?

Our differentiating point is that, as we renovate the house to rent it, the house works and pays for the costs of the care without the risk of losing it and without a mortgage.

At Pensium what we do is bring forward the rents from the future to the present, which is when they are needed. But, since we only charge one rent and pay up to double, and there are also renovations, expenses and interest deducted from the rents received, it means that, after a few years, there is still a debt to be paid off. How do we recoup it, if we cannot claim anything from the heirs? Well, once the person has passed away or has obtained a public place of their liking, we continue renting long enough to recover the amount that has been advanced. In other words, for several years we have been paying in advance the rents that we will collect later on. Of course, if the heirs want to cancel the program and sell or pay off the debt, they can do so at any time with no cancellation fees.

What challenges have you faced?

We have faced two challenges: the novelty of the formula we are using and the tax and duty costs.

The first challenge has meant that it has taken us years to get the word out about this formula and to gain credibility throughout the industry. Explaining a totally new solution that is conceived from a sustainable business perspective with social impact is complicated (we are a Benefit Corporation, a B Corp^TM, which is the movement that unites organizations that want to do their best for the world. We were chosen as Best for Spain in 2019 and as Best for the World 2022, because we are in the top 5% of the best B Corp^TM in the world).

And as for the second challenge, that of the taxes and duties related to the operations, we can now say:  challenge overcome! We managed to convey to all the political parties the need to promote a formula that not only helps dependent people, but also generates a rental market in gentrified areas. The reception was so good that in the General State Budget law for 2023 a final provision has been incorporated in which operations that advance rents for dependent persons and whose homes are dedicated to the rental market are exempt from tax and the registry and notary fees are greatly reduced. The best possible outcome!

What will Pensium be like in the future?

In Spain we want it to be a “normal” solution for meeting the costs of dependent care. What do you do when you want to buy a house? Get a mortgage. And if you want to buy a car? A loan from the dealership. And when you have to meet the costs of dependent care? Don’t sell the house, get a Pensium, “the solution in which rental money is advanced to you and then you get the house back” in a perfect state of repair.

What is happening in Spain in terms of dependent care?

We are becoming increasingly dependent. Roughly speaking, we can say that we are all going to experience about three years of severe or very severe dependency. This is what will happen to more and more people. We now have approximately three million dependent people, of whom one million are severely or very severely dependent, in other words, they need help to carry out a number of daily tasks.

Most of these people are being cared for by their relatives, some of them have public place in care homes, but many require permanent assistance and are in private places. Grants do not cover the cost of the centers and there will be more and more elderly dependents because boomers are getting older and because longevity, which is positive, leaves us all with some years of final dependency that we must deal with. Will there be money to make public places available for everyone? We already know there won’t. Can we use the savings we have in real estate to pay the costs of our dependent care? Yes, and if we don’t want to sell or get a mortgage, Pensium’s rent advance permits friendly financing of the care (the © on the concept “friendly financing” is from Barcelona City Council that decided to explain the Pensium program in this way on its website).

Which achievement has given you the most personal satisfaction?

In this start-up that has financial (we are supervised by the Bank of Spain), real estate (we manage hundreds of apartments) and social impact aspects (we are B Corp^TM since we have modified our bylaws to become one), so many things have happened.

The support of people and institutions has been very gratifying and the fact we have made it this far has been thanks to their determination. You have to remember that we have gone through a pandemic and our partners have been with us at all times, giving us extraordinary support.

Pensium’s team is outstanding, from the people who do the financial and real estate management to the social workers who are in contact with the families, all of them are very committed and know that we want to do things properly. With total transparency and empathy.

Achievements? Social impact certification from the Ship2B Foundation, B Corp Awards 2019 and 2022, the agreement with Barcelona City Council, each and every one of the partners who have joined the project, the social impact rating of the Pensium financial operations by EQA, the first issue of investment grade bonds (EthiFinance) in the MARF, the book by professors Lafuente and Serrano, the support of A3 media and Mediaset to get on TV, the new legislation that reduces the frictional costs of operations, and more. And one of our most cherished recognitions was the 2020 Fundación MAPFRE Award for Social Innovation, which entailed an economic contribution, but, above all, was recognition that opened doors.

But let me tell you that our first real achievement was back in 2018, when we received a response from Fatima, a person who visited our website and left us her details, and when we sent her a newsletter so that she could learn more about the world of dependent care and ask her permission to continue sending it to her, and she replied that thanks to the fact that Pensium exists she sleeps better.

What is your dream for this project?

I am obviously passionate about the project, but let me tell you that part of the dream has already been fulfilled: Pensium is here to stay and enjoys outstanding prestige.

What would we like? We want families in Spain to think about rental advances as a “normal” way of meeting assisted living care costs. We will help many families to manage their properties, the elderly will be better cared for, we will create a rental market and we will save public money. We also want families with dependents to think about Pensium. Hardly anything.