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Scotland the brave

The Scottish Executive&#39s plan to offer free personal care to all

pensioners has added heat to the debate over long-term care but its effect

on IFAs is double-edged.

Although the public discussion has raised both IFA and public awareness of

protecting assets against the high cost of LTC, the confusion makes selling

LTC products harder for IFAs.

The committee appointed by the Scottish Executive to deal with the issues

of what personal care will mean and how it will be administered is

wrestling with how to create a system that will not break the bank and add

to the amount of care given.

The Government this month introduced changes to the rules on payment for

LTC affecting the rest of the UK, which saw the upper means-testing limit

for capital increase from £16,000 to £18,500, beyond which

pensioners will not get any state help with LTC.

For pensioners with assets of between £11,500 and £18,500, the

first three months spent as a “permanent resident” in a care home will not

be included when assessing their ability to pay for care.

The complexity of the Scottish Executive&#39s proposals means companies have

been cautious with their LTC product designs. What the Scottish people may

be expecting guaranteed personal care to consist of would cost a

considerable sum on the private market.

The Scottish Executive&#39s committee will be faced with costing what is

potentially an open-ended financial commitment. Carers who are looking

after relatives and friends for no money could withdraw that support if

they believe the state will provide the same support.

With an ever-ageing population leading to more people living alone, the

costs of a comprehensive state plan will get far bigger when projected


Westminster has responded to the royal commission&#39s recommendations on LTC

by saying it would prefer to spend some of the estimated £1bn cost of

providing personal care in getting people out of beds and home, which also

relieves pressure on NHS beds.

The commitment South of the border is to offer nursing care but what that

will amount to is still being discussed, with a decision due in October.

Some believe that if a level of state care provision is introduced in

Scotland beyond that provided in the rest of the UK, then Westminster will

be shamed into extending provision nationwide. But Tony Blair has made it

clear in Parliament that he thinks the money could be better spent


Scotland has already distinguished itself from the rest of the UK by

paying for Scottish students&#39 fees – a commitment that is a lot easier to

quantify – but the rest of the UK has not followed suit.

If a clearly different arrangement is put in place in Scotland, Opposition

parties and pressure groups in the UK will doubtless castigate the

Government for not doing enough for pensioners.

Zurich IFA protection marketing manager Paul Heaphy says: “It is a nice

political commitment to make. To say you will look after OAPs is great. The

borders will become the Bournemouth of the future.”

IFA Care president Graham Fidoe says his members feel it is a political

issue in Scotland and think the plans may not come to pass. He says: “It

may be next year before a decision is made. We need clarification more than

anything. The general public is still uncertain but we are seeing more

advisers going into the long-term care market.”

Age Concern Financial Partnerships technical manager Chris Ellicott

believes the discussions have really raised the issue in the minds of the

public. He says: “We are getting a lot more people enquiring about what it

could mean to them. Long-term care is definitely moving up the awareness


The free nursing care that will be introduced across the UK in October is

up to a limit of £5,000 a year. With the average cost of a nursing

home in the UK at £19,604 a year, LTC products are aimed at people who

have assets to protect.

PPP Life Care marketing manager Paul Bennett thinks that because of the

various debates and the royal commission, IFAs have put off thinking about

LTC until the Government sorts it out. He says: “But now more IFAs are

recognising it is an important area of financial planning.”

The Consumers&#39 Association welcomes Scotland&#39s decision to offer more care

but sees the need for high-quality advice as essential.

Principal researcher Teresa Fritz says: “The whole area is fraught with

complications and emotion. The consumer is in a poor posi tion and does not

know where to go for advice.

There are good policies and good advice but advice is in short supply.

Until who is going to pay for what has been sorted out, people do not know

what they have to fund.”

The Consumers&#39 Associ ation is critical of the Treasury&#39s proposals to

introduce Cat standards for LTC insurance products. This echoes the views

of the Financial Services Consumer Panel, which felt the standards are set

too low and are too open to differ ent interpretations.

Fritz says: “We normally welcome industry standards but because this

market is so specialised, some of the best products are not Catmarked. The

market is small at the moment but products could flood it. Long-term care

products are not off-thepeg products. It is a confusing maze to get through

and getting specialist advice is important.”


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