Is it time to care about care?

Posted on Aug 01, 2019

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When looking towards retirement and old age, people have realised there’s a chance they might need care at some point. In fact, according to recent research by AIG Life, 69% of people believe they will, while 20% don’t know and 11% think it will never happen to them.

The research, which involved 3,000 people, also revealed that 48% of people would be willing to fund care needs by saving into a special fund that could be left to loved ones, if it wasn’t used. 

AIG also found that people were fairly evenly split over the ideas of paying more income tax or starting to pay a social care tax after reaching a certain age. The least popular option for funding care needs was to sell property once you reach a certain age, with 52% of people saying this would be ‘unacceptable’.

In addition, AIG asked people across the UK at what age they believed they would need care. The UK figure was 76.5, while those in the South East suggested the highest age, at 78 (the lowest age was 73.9, from people in Wales). 

In early July, the House of Lords Economic Affairs Committee published a report called ‘Social care funding: Time to end a national scandal today’. 

The Committee found that publicly funded social care support is shrinking, as diminishing budgets have forced local authorities to limit the numbers of people who receive public funding. Funding is £700 million lower than 2010/11 in real terms, despite continuing increases in the numbers of people who need care. The Health Foundation and King's Fund estimate that to return quality and access to levels observed in 2009/10, the Government would need to spend £8 billion.

The funding shortfall has meant local authorities are paying care providers a far lower rate for local authority funded care recipients than self-funded care recipients, and those care providers with a high proportion of local authority funded care recipients are struggling to survive.

To address unfairness in the system the Committee proposes bringing the entitlement for social care closer to the NHS by introducing free personal care. They said that additional funding for social care should come from national government, which should raise the money largely from general taxation. 

Recently, the Association of British Insurers (ABI) revealed six main priorities that it believes the government should take into account:

  • Raise awareness levels: It is imperative that any new system raises the public’s awareness of their liability to pay for care, as well as the costs involved.
  • Help individuals plan: There are not currently many individuals making plans to meet care costs in later life. Funding is not a top priority for people to protect against during working life, meaning they do not budget or plan for the risk, nor do they access advice and guidance about planning for later life. ABI polling found that 89% of individuals have no plans to meet care costs.
  • Consider the role of incentives: If, following reform, some individuals are required to self-fund, then effective mechanisms should be in place to incentivise these people to plan ahead.
  • Keep it simple and clear:  Any new settlement needs to be easy to communicate to the public, and there needs to be a clear delineation between State, local authority and individual responsibility.
  • Plan for the long-term: Individuals need to be able to plan for the long-term and have confidence that the system in place is robust and will remain largely unchanged for a reasonable amount of time.
  • Be realistic: There needs to be clarity that the care funding solutions for those who can afford care will be, for now, a range of products that can be used individually or in combination, rather than a single, voluntary and comprehensive, ‘silver bullet’ product.

The ABI has proposed tax breaks, a new ISA and more opportunities for people to tap into the value of their home. 

Here at Goodman Care Fees Advisers, we use our many years of experience and specialist qualifications to guide you through the various funding options and help you decide on the most suitable strategy. Importantly, both Neil Whitaker and Andy Kirk have achieved the Later Life Adviser Accreditation and are full members of SOLLA (Society of Later Life Advisers), which gives our clients even more peace of mind that the advice they receive is excellent. 

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