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Mel Kenny: A new dawn for the long-term care market

It was with little surprise we saw another Green Paper looking at reform of care and support for older people, due in summer, merely kicked down the road into the autumn.

Then the incumbent health and social care secretary was replaced shortly afterwards.

With all votes beginning to count as the disengaged becoming louder in voice, his successor, Matt Hancock MP, used his opening address to talk about a funding of health and social care “that is nationally agreed, clinically led and locally supported”.

My hope is that, as a society, we will identify our common values in how we want to care and be cared for, and that the government will take these on board before defining and imposing its policy on us.

Otherwise it will be the likes of the Daily Mail that will be the nation’s voice and decide a proposed policy’s fate in one fell swoop.

The “Dementia Tax” headline was a case in point. While the policy looked to redress the imbalance where many receiving homecare do not pay for their care, it was really poorly handled.

Economist Professor Gerald Holtham recently looked at how costs could be shared across the generations, which is an avenue that could be explored further.

His age-related income tax – already morphed to the handy soundbite of age tax – is in keeping with the times of fairness in which it is recognised millennials are already paying too much for the baby boomers and do not want to pay more. This is in stark contrast to general election campaigns of old which promised reductions in income tax of elders or handed out winter fuel payments to secure votes from the engaged masses.

But do not expect the taxpayer to pay in full for the likes of Sunrise Senior Living. That would need personal funding, which is where advisers come in.

Crisis point funding is crippling the NHS, crippling local authorities and, on the other side of it, crippling families

Both the public sector and taxpayers have got to move away from crisis point funding: it is crippling the NHS, it is crippling local authorities and, on the other side of it all, it is crippling families.

The move to an Age Tax can be viewed as a basic insurance; a pooling of risk to cater for the extreme event where the government is best placed to step in. Because apart from those who can afford it, who is going to deliberately save for the small chance of needing long-term care when they are already struggling to save for the more likely event of making it to retirement?

Product providers recognised this issue years ago but opt-in pre-funded long-term care insurance plans were difficult to shift and attracted a loss-making average age of entrant of something like 67.

No doubt Brexit will get in the way of policy changes. But irrespective of actual dates, an open discussion has to start now, for there are product providers looking to get into the market with new solutions.

It is true, researchers have been in touch. With most other margins on financial products cut to the bone, it seems the want to make the long-term care market work is gaining support. Things are starting to happen.

So, yes, it might well be worth getting CF8, ER1, SOLLA accredited and all that jazz after all, as advisers will want to be on hand to provide the clarity so desperately needed.

Mel Kenny is a chartered financial planner at Radcliffe & Newlands

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