The government’s system of funding care is too complex and it is difficult for people to understand how much it is likely to cost, according to a report by the Institute and Faculty of Actuaries.
The report looked into the care funding reforms which will be implemented in 2020.
It looked at three case studies to highlight the large amount of information which would need to be considered, including the means testing thresholds, housing arrangements and pensions.
The report recommended a national awareness-raising campaign in a bid to help people understand what their potential care costs might be as well as highlighting what state support is available.
Thomas Kenny, chairman of the products research group of the pensions and long term care working party which produced the report, said: “As life expectancy has been increasing, unfortunately healthy life expectancy has not kept up. It is estimated that 25 per cent of men and 35 per cent of women aged 65 today are likely to need care at some point in their lives.
“We believe that it is in the public interest that people have access to information to enable them to understand the extent of their potential future care costs and to help them make informed choices now to avoid making funding decisions at the point of crisis. Both Government and industry have a role to play here.”
Since April, local authorities have had new legal duties relating to their provision of long-term care.
This includes pointing people in the direction of financial advice if it is needed as well as changing how local authorities determine who is eligible for support.
The IFoA report also found the means testing rules act as a disincentive to save for long-term care because when the thresholds increase in 2020 it will mean 50p of every additional £1 saved will be taken away to fund a person’s care.
To tackle this the report suggests allowing some form of saving to be exempt from means testing, up to a specified threshold.
Jim Boyd, corporate affairs director at Partnership, said: “Navigating the care funding system can be complex but the report clearly highlights that in order to encourage people to make provision for themselves, we need to understand, educate and incentivise.
“Education is also key as our Care Index shows that most over-45s have not thought about care or spoken to their families about it.
“This lack of engagement means that when someone does go into care they are often financially and emotionally unprepared.”
Adviser view
Lorreine Kennedy, founder of Hertfordshire-based Carematters, said: “Working out the shortfall is incredibly simple. The issue is about using assets in the most effective manner and that’s where an adviser comes in.”
