Much more work is needed to move the long-term care agenda forward, according to the pensions minister, who backed the possibility of innovation around saving plans or care Isas.
Speaking at today’s Marketforce Retirement Solutions Forum, Ros Altmann stated that while there has been billions of pounds set aside for pensions provision, barely any is being saved for long-term care; either at an individual or institutional level.
“We really need a plan, especially as the baby boom cohort is coming through into retirement now.
“I think the chancellor’s freedom and choice reforms have the potential to kick-start this and between government and industry we can come up with some kind of savings solution.”
She added this might come in the form of some new savings plan, mentioning the possibility of a Care Isa to go alongside recently developed versions for innovative finance and Help to Buy.
Hargreaves Lansdown’s head of retirement policy Tom McPhail suggested Wednesday’s (25 November) Autumn Statement could include an Isa for care funding, which is inheritance tax free if not spent on care costs.
However, Axa Wealth’s head of investing Adrian Lowcock, argued that while the aim behind new versions has been well intended, the result is that Isas are now much more complicated than they were originally meant to be.
He said: “The appeal of Isas has always been their simplicity. We would encourage a period of review and consideration with no further tinkering of the Isa rules to ensure as much as possible is done to encourage people to save and invest for their future.”
Ms Altmann also tackled her two highest priorities upon coming into office earlier this year: auto-enrolment and the new state pension.
On the former, she said that financial education working towards retirement should be starting in the workplace when employees are auto-enrolled. “The government is handing millions of new customers on a plate through auto-enrolment, the industry needs to do more to help get them up to speed.”
This followed her comments at the PFS financial planning symposium earlier this month, where Ms Altmann said financial education and guidance needs to be embedded into auto-enrolment.
“We have worked financial planning into the curriculum at schools, and I think pension providers will be well served by developing products, modules and services that will help educate people in the workplace,” she said at the time, adding that “this is an opportunity for the pensions industry and for financial advisers as well”.
Touching on previous criticism of the government’s late and lacking promotion of the new state pension - due to come in next April - she pointed out that it has been one of her priorities and admitted that so far the reforms had been “misrepresented”.
At the end of last month, the shadow pensions minister Nick Thomas Symonds took advantage of Ms Altmann’s attack on actuaries Hymans Robertson for highlighting potential losers from the reforms.
His party colleague and chairman of the Work and Pensions Committee Frank Field launched an official inquiry into the state pension changes, after concerns were raised that many of those who will be affected do not know enough about the changes or exactly what they will mean for their pensions.
Ms Altmann stated cleaning up the communications piece was one of the first things the Department for Work & Pensions had to do. “I think it has been misrepresented and people had to understand how it was going to work and why it was the way it was.”
peter.walker@ft.com
