Your IndustryNov 12 2015

Care Cap delays will hit pensioners hard

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Care Cap delays will hit pensioners hard

Thousands of pensioners will be hit hard by the government’s decision to delay the care cap, Care Minister Alistair Burt has admitted.

In a parliamentary written answer on 2 November, Mr Burt said that postponing the cap’s introduction from April 2016 to April 2020, will be to the detriment of 23,000 pensioners in 2016/17. It could also hit 80,000 more older people over the next decade.

The written answer said: “Based on the most recent impact assessment, had the cap system been implemented in April 2016, approximately 23,000 older people in England would have benefited immediately in 2016/17, and by 2025/26 up to 80,000 additional older people would have received state support.”

This answer comes months after the government announced that it had decided to delay the introduction of a cap of £72,000 on the amount people pay towards their residential care.

On 17 July 2015, Mr Burt wrote to councillor Izzi Seccombe, chairman of the Local Government Association, explaining that although he agreed that the Care Act 2014 was “a historic piece of legislation, and an incredibly important moment for adult social care”, the introduction of the cap on care costs was necessary “to ensure that the new system works from day one”.

However, Janet Davies, joint founder and managing director for national care fees advisory network Symponia, said the cap was only part of the whole picture.

Ms Davies said: “Even if the care cap had been implemented as promised in April 2016, it is Symponia’s understanding that the people in care at this time were unlikely to have expended their care cap until November 2021.

“It is all very well lambasting the government for breaking its promise, but the care cap was never the panacea it was cracked up to be. We understand why people think postponing the cap is a betrayal, but few people actually live in a care home long enough to erode their care cap, which, depending on which figure you use, will take five to five-and-a-half years.”

Adviser view

James Burke, managing director of Dover-based Black & White Financial Planning, said: “I believe the difficulty with planning for care costs is the number of unknowns. Will care actually be required? If so, what type of care and for how long?

“I have clients with immediate needs who are reluctant to spend their savings because of the possibility of future long-term care costs. I believe the care cap would help the insurance market in developing a product to meet LTC [long-term care] costs, which in my view is likely to be the best way of helping clients to prepare for meeting potential long-term care costs. I would also support the idea of allowing tax-free access to pension savings if they are used to meet care costs.”