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Ros Altmann: How advisers and politicians can tackle the social care crisis

The Government urgently needs to address the ticking time bomb of baby-boomers needing help with later life care

Ros AltmannBillions of pounds has been set aside to pay future pensions, with policymakers prepared for the upcoming costs of supporting our aging population in retirement. Initiatives to address the crisis have improved coverage of private pensions and reformed state pensions to ensure sustainability.

However, there is another crisis nobody has prepared for and which will worsen dramatically as the huge amount of baby-boomers reaches later life. There is no money earmarked to fund future care needs.

Social care has been neglected for decades. Responsibility rests, not with the NHS, but with cash-strapped councils that have had to cut provision. Those needing residential care must pay their own bills until they have used almost all their life savings. Councils only start paying once assets are below £23,250, usually including the value of a house if no partner lives there.

The artificial distinction between what counts as healthcare and what is considered social care means millionaires with cancer can have all their care costs covered by taxpayers, while low-income widows with dementia may get no help at all. Indeed, care shortcomings and flawed reform proposals proved politically toxic to the Conservatives in their recent manifesto.

As council funding has fallen, care provision is rationed, only helping those with severe needs. Those with moderate needs must fund themselves or manage without. What is more, local authorities usually only offer basic care – perhaps a care home far from loved ones or just 15-minute visits.

Just as with the state pension, you need private funding if you want more. But where can that money come from?

So far, governments have done nothing to help people prepare. What about a cap on the costs individuals must pay privately? For example, a £100,000 maximum lifetime payment per person would allow people to start planning. Once they have spent this capped amount, the state could cover those needing care for longer than the average three years.

Conservatives target social care costs for wealthy pensioners

Savings incentives would also help. Currently, all incentives focus on pensions but 21st century retirement is about more than that. Ordinary pension income is not designed to cope with supporting those who cannot live independently. Each family should be encouraged to have a “care pot” in case it is needed. Some ideas for new incentives to help people build a care fund might include:

  • Care Isas which can pass on free of inheritance tax if unuselater lifed
  • Allowing people to withdraw money from their pensions tax-free to pay for care
  • A national “equity release” scheme.

All this would help address the looming catastrophe of elderly people spending all their money too early before falling back on state support, costing more to younger taxpayers, and being unable to choose the care they want.

Advisers would have an important role to play in explaining new incentives to clients and could start lobbying their MPs about this issue. In the meantime, they should still aim to help clients understand the need to prepare. The sooner we start addressing this crisis, the better all our futures can be.

Ros Altmann is former pensions minister

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. With government blurring the lines constantly around pensions, social care, healthcare etc, then it’s hardly surprising we are in this mess. But to be honest (and speaking as someone who is the sole beneficiary of elderly parents).

    The idea that people shouldn’t have to pay their own way (care funding wise), so they can pass on assets to their children is a bit of a joke.

    The toxicity of what the government proposed was mostly due to vast numbers of people being utterly selfish. “Mum and dad worked for decades to buy that house, why should the government get it”.

    Therein lies the problem, the government isn’t getting it, their parent is getting the benefit of it, but people are selfish and when it comes to the old evil money, they are very selfish.

    They would rather have their low earning children or other people working hard for not much money for their parents care, because then they might receive a smaller inheritance themselves.

    A perfect example of one of the worst aspects of humanity.

  2. Why is that people, even intelligent people like Ros Altman, can’t understand that paying for care is unaffordable for any Government.

    There is no “blurring of lines” between Health Care and Social Care. If it can be treated by a Doctor or Nurse, it is Health Care, if it cant, it is Social Care. Even with Cancer or Strokes, there’s no ongoing after-care; once the Doctors and Nurses have done their bit, that’s it.

    No doubt that Dementia, in it’s many guises is a disease, but it isn’t a disease that can be treated. So, like a Stroke patient who is left paralysed, a Dementia patient just needs help with daily living, which is Social Care.

    What Government and Advisers can do is put a stop to folk avoiding their obligations by putting assets into a Trust during their lifetime. If you put your home in a Trust and then carry on living in it, what have you actually given away? Nothing!

    Local Authorities should be instructed to look through, so-called, Asset Protection Trusts and treat folk as though they still own the assets. This will save millions!

    • Nicholas Pleasure 30th October 2017 at 2:17 pm

      And whilst they are at it they should see a distinction between life insurance policies and single premium life insurance bonds. One is protection and the other is an investment.

  3. Nicholas Pleasure 30th October 2017 at 2:15 pm

    Once again the point is entirely missed with the emphasis being on protecting inheritance rather than paying for care.

    The real problem is that local authorities are prepared to pay too little for care. Whatever level State funding becomes available, it is irrelevant if the amount paid is insufficient to meet the cost of care in a reasonable quality local home.

    Most clients main concern is not that all of their money will be spent, it is about what happens when it has gone. Where will they end up?

    The difference between Local Authority funding and private fees can be £20-30,000 a year, so most private care homes cannot accept that even if they would like to.

    Ros’s idea of a £100,000 cap on care costs sounds great but the question is what does it cover when you reach the cap?

    In my area local authorities cover care funding to around £500 a week whilst many private homes are charging £1,400 plus. So Ros, which does your £100,000 cap cover? Do I get to stay in my luxury £1,400 a week home or must I find some stinking hell-hole at £500?

    If it’s the former then where does it stop? If I own a care home, why would I charge £1,400 a week if the state will pay me whatever? Why wouldn’t I charge £5,000 a week? It will still cost my residents £100,000 in total. Do you see the problem with this approach?

    Also, that £100,000 is brilliant for the multi-millionare, and especially brilliant for his or her beneficiaries. It’s not that great for the person living in the £70,000 retirement flat whose total wealth will be used.

    Bizarrely, the ‘toxic’ solution put forward by the Conservatives was actually not bad and was both fair and reasonably workable, if poorly explained. It also may be low cost or cost neutral so could actually happen.

  4. Is there really a crisis or just a lack of legislative gumption. The secret seems to be in one of your sentences:
    “usually including the value of a house if no partner lives there.”

    So if one of the partners lives there the value of the house is not counted. Why not? It isn’t rocket science. The cost of care over the persons sojourn is taken as a debt on the hose and is recovered from probate once the last partner dies.

    So the kids scream foul? Then step up to the plate and look after your aged parents – as was the case up to the 1960’s. It is not the place of the taxpayer to secure your inheritance.

    • Nicholas Pleasure 30th October 2017 at 4:17 pm

      Harry, that is exactly what the June 2017 Conservative Manifesto suggested. Seemed like a good idea to me and it means that those receiving care at home would be treated the same as those receiving care in a care home.

    • Agreed. My personal solution when I meet that old age will be a return to parachuting (my static line jump was eventful to say the least) and as many other extreme sorts I can think of with a Swiss backstop.

  5. I think all far-sighted folk can see the train crash coming (in fact we could see a repeat of the Southern Cross debacle in the care home sector as soon as next year). The issue seems to be about funding, but if it’s left to governments nothing of the necessarily radical nature will get done. In my recent vlog (http://www.ariesinsight.co.uk/webfront/vlogpod.htm) I argue for a Later Life Commission.

  6. This is the same Government that encourages us to spend our pension pots as soon as we reach age 55, hardly a surprise that planning for future care is not a priority.

    However, if you have been prudent you are quite rightly expected to pay your way, if you have spent irresponsibly someone else picks up the bill.

    That is the unfairness in the system, and I am sure as advisers we have had many wealthy clients asking how they can avoid paying for care when they could fund it many times over.

    Perhaps it is a question of moral duty, which is bound to polarise opinions.

  7. Pensions Minister Steve Webb described her as someone with a reputation for speaking up without fear or favour.
    Great news for the Frozen pensioners or so we thought when she became Pensions Minister. She would raise this
    issue and get a debate going against the immorality and discriminative policy that has been in place for decades ! But no.
    Once in the chair she said that she was gagged and was unable to raise this issue.
    Well, she is not gagged now but we here nothing from her so where are you Ros ?
    Why have you abandoned the minority 4% of pensioners worldwide who get no indexation while the other 96% do ?
    We Frozen pensioners are not going to go away until we die and cannot comment – is that the plan ? Government giving away £Billions in aid to who knows what in places where frozen pensioners live in retirement but are denied equality with their peers in other preferred countries where Gov’t pension discrimination is not practiced at a cost to pay these pensioners about 1/20th of the Aid freely given.
    Let us hear from you Baroness Altmann who will get a nice fat pension in retirement.

    • Andy Robertson-Fox 1st November 2017 at 9:32 am

      I agree it would be nice to hear some comment from Baroness Altmann on the frozen state retirement pension issue and, indeed, the cost of care for pensioners who retire abroad.
      I am not sure that she will get “a fat pension” as her period as the Minister (when she was salaried),was quite short and now, as simply a member of the Lords, she is only entitled to claim an attendance allowance and associated expenses.

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