View more on these topics

Low earners hit by state pension and LTC double whammy


Low earning renters are set to lose out from the combination of reforms to the state pension and long-term care, an influential think-tank warns.

A report published yesterday by a research team which includes staff from the Pensions Policy Institute and London School of Economics, warns low earners could lose out without transitional protections.

The single tier state pension takes effect from next April , while the cap on individuals’ long-term care costs is due in April 2020.

The report says homeowners are likely to benefit from both set of reforms.

But it adds low income renters are more likely to be worse off as they will lose more in means-tested benefits than they gain in the new state pension system.

PPI director Chris Curry says: “The combined effects of these two sets of reforms have received little attention despite interactions between them.

“If an individual’s net income changes as a result of changes in their state pension entitlement, the contribution they are required to pay towards their care costs can change. An increase in state pension income can be wholly or partially offset by an increase in liability for care charges.”

University of East Anglia economics of heath and welfare professor Ruth Hancock says: “Medium to high earners who own their own homes do well from the state pension reforms as they age. Low earning renters are less likely to benefit or may lose out from the reforms as their entitlements to means-tested benefits can fall because of the removal of the savings credit.

“This risk is increased if there is no transitional protection for housing benefit and council tax support, and if the savings disregard for residential care costs is removed, as we have assumed in our research.”


Behind the headlines: Death of the long-term care cap

In April the Conservatives wrote into their manifesto a pledge to cap the costs of long-term care. Just three months later, the party announced the £72,000 cost cap would not be coming in April 2016 as planned, but April 2020. Former care minister Norman Lamb told Money Marketing to see the move as anything other […]


Long-term care cap pushed back to 2020

The Department of Health is delaying its plans to implement a £72,000 cap on the cost of long-term care. The cap was expected to come into force from next April, but has now been delayed until 2020. Care and support minister Alastair Burt says: “A time of consolidation is not the right moment to be […]


MPs to probe ‘moving goalposts’ of state pension reform

The Work and Pensions committee is to follow its investigation of the retirement freedoms with a new inquiry into the state pension reforms. The committee says it is worried those close to retirement in particular may not understand the new system, having done most of their planning under the previous rules. It also raises concerns […]


News and expert analysis straight to your inbox

Sign up


There is one comment at the moment, we would love to hear your opinion too.

  1. OK…let’s ignore the long term care cap as irrelevant. It has been delayed till 2020 ‘subject to a spending review’ so it’s not going to happen. The reason it was delayed is because it is impossible for social services to administer without doubling or trebling the number of social workers in elderly care teams.

    Finally, it’s not a cap on care cost at all. It will give people around £150 a week after around 6 years.

    So the think tank mentioned clearly are not thinking very hard or are making policy advice without really understanding the policy, which is pretty much how we got into this mess in the first place.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm