Pensions overhaul has ‘major implications’ for LTC reforms

Experts are warning the Government’s pension reforms have “major implications” for the lifetime cap on care costs.

The Care Bill is proposing a £72,000 cap on care costs from April 2016.

It will be available only to those with assets of less than £118,000, excluding property.

Experts are concerned savers who  take large parts of their pension pots in cash could move above the means test and not qualify for the cap.

Society of Later Life Advisers president and Labour peer Lord David Lipsey, who campaigned for a higher means test, says: “[Budget reforms] have major implications for the means test as if you have capital above a certain amount you lose out.

“If people take cash instead of income they will be worse off by miles, and a lot of people will be taking it.

“The rules will have to be revised or it will be a major obstacle to what the Chancellor wants to achieve.”

Former care services minister Paul Burstow says: “It is right to raise the question about how pension pots interact with the means test, and the Treasury and the Department of Health need to discuss this.”

Care policy adviser Peter Barnett says: “Consumers will be hit pound for pound on means testing if they take their pension as cash.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Lets get this straight – the cap is not £72K. Most people will have ploughed through around three times that once “hotel costs” are added. Therefore, for the majority in England the cap is worthless – it will benefit the very rich though, which is nice.

    Sadly the LTC legislation is a case of the Tories supporting their own, which is such a shame because the people who desperately need help will still be left high and dry by these expensive reforms.

    Lord Lipsey doesn’t need to worry. Most people have pension pots of £30K or so and withdrawing that and spending it on the holiday of a lifetime is definitely the best advice most of us can give to the average person!

  2. Different Point of View 28th March 2014 at 11:19 am

    If people have unrestricted access to their pensions, will they be forced to use these funds? I fear the answer may be yes and the same may also apply to those who go bankrupt.

    This is the question that must be answered will all parties involved getting a clear and defined answer, rather than some poor person having to go to the expense and time of fighting it in court!

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