Rachael Griffin is tax and financial planning expert at Old Mutual Wealth. Rachael holds the CII award in Long Term Care Insurance.
The number of people aged over 75 in the UK is set to almost double to nearly 10 million by 2040, according to projections from the Office for National Statistics. The impacts of the rapidly aging population are wide-ranging. One of the most severe on both the public and the government is the cost of care.
Currently, there is a negative and confused public perception of what the state offers, primarily because it is complex. People don’t know what the state will contribute towards later life care and often they don’t know how to get it either. This creates an environment where it is almost impossible for people to plan ahead efficiently.
On top of this the current mean tested system means anyone whose assets exceed £23,250 pay for all of their social care needs. Those whose total capital falls below this figure, or have very serious care needs, will have either or all some of their care paid for. This discourages people from making any provision for their care, because if their assets are going to deplete and the state will step in, why should they save?
As the government consider a new care system they need to ensure that the new framework they set up tackles both of these challenges. It will need to be clear and straight forward and it will need to encourage people to make their own provision.
As part of the solution the government should look at the packaging and distribution of existing state benefits; namely, the State Pension, the attendance allowance and funded nursing care.
NHS-funded nursing care provides £155.05 per week, paid directly to the care home and is eligible for anyone that has been assessed as needing care from a registered nurse or a care home registered to provide nursing care. Similarly, anyone over 65 who needs help with personal care can benefit from the attendance allowance. The amount a person requires depends on need, with the higher allowance at £83.10 and the lower rate of £55.65.
On top of this people aged 65 and over are eligible for basic state pension of £122.30 per week if they have made the appropriate amount of National Insurance Contributions. So these benefits combined mean a person over 65 in need of care could access up to £360.45 per week, no matter their wealth.
However, accessing these benefits is challenging as they sit within different government departments and require multiple assessments. The new care system needs to package these allowances together so someone in need of care will go to one department to apply for a tax-free weekly sum for their care.
This creates a basic state contribution that is available to all. This means people will get a clear idea of what is publicly available and a clear idea of the provisions they will need to make on top to meet any additional costs. Plus, like the current pension system, people will need to make their own provision in addition to the state support.
This will in not be the silver bullet solution the social care crisis. However, it will provide a sensible strand that could be partnered with other policies to combat the crisis.
As the government devise a new social care system they need to offer clarity and simplicity. In the end the public simply want and need to know if they are going to get funding and, if so, how much.
