Axa Wealth is calling for an additional annual savings allowance of £10,000 to allow people to save towards the cost of long-term care.
In response to last week’s Dilnot report, Axa Wealth head of pensions development Mike Morrison says: “The report highlights the need for innovative product solutions, which can only happen if financial services and the Government work together.”
Morrison says equity release and other forms of personal saving only go part the way towards the cost of care.
He says: “We need to find a way to encourage people to build up a fund which is ring fenced exclusively for long term care.
“With this in mind, I believe that in addition to the annual pension contribution allowance of £50,000 a further £10,000 should be permitted solely to fund long-term care, which would be tax-efficient. These savings can serve as a supplement to the £35,000 cap suggested in the Dilnot commission report.”
He also warns that seeking appropriate advice will be even more necessary when planning long-term care.
Morrison says: “Crucially more than ever, consumers will need qualified and independent financial advice to help them increase their pension saving.”
But Richard Jacobs Pension and Trustee Service managing director Richard Jacobs says: “We must find a way of using pension pots to secure the Dilnot £35,000. However, people who can pay £60,000 instead of £50,000 do not have a long-term care problem anyway. Axa’s solution favours the people who do not need help.”