Who pays for any care that you may need in old age? At present, the answer is far from simple. The four parts of the UK each have their own system, with Scotland the only country providing a payment for personal care costs that is not means-tested. In England, the level of support can depend on where you live, because each of the 152 local authorities sets its own charging policies for domiciliary care, even though a national system applies to residential care charges.
The previous Government published a Green Paper on long-term care in England in July 2009, but it was widely seen as a move to sideline a difficult issue until after the election. The Coalition Government’s response was to set up a commission to review care shortly after coming to power. That commission, chaired by the economist Andrew Dilnot, issued its report (‘Fairer Care Funding’) in July and made the following proposals (which only affect England):
- Your lifetime contribution to your care costs should be capped at ‘between £25,000 and £50,000’. The commission thought £35,000 was ‘an appropriate and fair figure’ for those aged 65 and over. At present, if the state does not support you, there is no cap on what you might have to pay.
- If you have capital of more than £23,250 there is no state support at present, other than £108.70 a week if you require nursing care. The commission proposed that this capital means test upper limit should be increased to £100,000. The lower means test limit of £14,250, below which all your costs are met, should remain unchanged in the commission’s view. The upper limit change is not as generous as it seems because, between these two limits, you would (as now) have to make a contribution of £1 a week per £250 of capital. So, if you had £89,250 of capital, you would be expected initially to contribute £300 a week.
- Regardless of what state support you receive, you would be required to make a payment to cover your general living costs if you are in residential care. The commission suggested that ‘a figure in the range of £7,000 to £10,000 a year is appropriate’, although its calculations were based on the higher number.
If implemented, these proposals would put an end to the current situation in which you could lose up to 90% of your accumulated wealth if you go into care. However, the commission’s plans could still leave you with a capital cost of up to £35,000 plus having to
find £10,000 a year. Even this is not quite the full story, because the £35,000 cap is based on your local authority’s ‘typical’ cost for care, not your actual expenditure, which could be much higher.
The Government’s response to the commission’s report has been to set in train more consultation and the promise of a White Paper next spring. This procrastination may be because to implement the proposals would cost a net £2.2 billion a year in 2015/16 (assuming a cap of £35,000), money the Government does not have.
Unfortunately for now – and probably for the longer term – care costs will remain another element to factor into your retirement planning. This might explain why the Government has made changes to allow you to delay drawing some or all of your pension benefits until after age 75.