The government needs a long term strategy for the future of later life funding, according to the International Longevity Centre-UK, adding that “recent successes in poverty reduction at older ages could be reduced to a footnote in history”.
A new white paper from the think tank argued that a strategy for later life funding must secure effective funding for adult social care, implement the Dilnot Commission social care reforms and find ways of ensuring the provision of mass market financial advice.
In 2011 the Dilnot Commission made a number of key recommendations for a fair and sustainable funding system for adult social care in England.
It said that the contribution that any individual makes towards their care costs during their lifetime should be capped, as opposed to the current system that imparts potentially unlimited liability. It said that the cap should be between £25,000 and £50,000, recommending a suitable figure of £35,000. After this threshold has been passed, the report recommended that care fees be met in full by the state.
The white paper also urged the government to develop default options for those who “sit on their pension pots and do nothing”, while being clear around what constitutes the deliberate deprivation of assets within the context of the new pension freedoms.
Finally, the report suggested that the state should help incentivise downsizing, supporting innovation in the equity release market.
Earlier this month figures from Key Retirement showed that retired homeowners have seen their property wealth grow by more than £12.5bn in the last quarter as house prices continue to climb, intensifying demand for more lifetime mortgage products and advisers to sell them.
Baroness Sally Greengross, ILC-UK’s chief executive, said that the country is at a cross roads. “There has been undoubted progress in reducing pensioner poverty, particularly at older ages, but we must guard against complacency.
“Not all babyboomers are wealthy and the pension freedoms alongside an over reliance on housing wealth poses risks to future retirement incomes,” she stated, adding that for tomorrow’s pensioners, there is a huge question about whether they will be able to depend on the state to provide adequate levels of support given the rising fiscal pressures of supporting an ageing population.