Meeting the cost of care

The latest in a long line of Government-sponsored reports into long-term care funding has been published. This one might not end up being left on the shelf.

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):

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.