Long-term social care will “be a big headache for government” despite the chancellor’s pledge to provide additional grant funding of £2bn to social care over the next three years, according to Gordon Andrews, financial planning expert at Old Mutual Wealth.
He accused chancellor Philip Hammond’s Budget of being “light on detail”, with the funding announced today (8 March) adding the plans only act as a “sticking plaster”.
“But there is still serious work to be done to tackle the question of long-term care,” Mr Andrews added.
“Today the chancellor indicated the government green paper on social care is likely to look at merging NHS and social care. There are a myriad of options available.
“In terms of helping people save for their own care, government could focus its efforts on ensuring the pensions system allows people to fund retirement, including care needs at the end of their lifetime.
"This would be far simpler than re-inventing the savings system with new products designed to meet the cost of care.”
Aegon’s pensions director Steven Cameron said tackling social care would be “the next frontier of retirement planning."
We believe individuals are more likely to include social care funding in their pension savings rather than saving in a separate care Isa or insurance plan.Steven CameronHe said: “As well as welcome measures to boost government funding, the promised green paper needs to deliver a long-term ‘deal’ between individuals and the state with incentives to encourage people to save for their share of possible long-term care costs in older age.
“Funding social care will increasingly be part of preparing for older age, allowing individuals choice about their care in later life and should be viewed as a preventative measure."
Mr Cameron said: “We believe individuals are more likely to include social care funding in their pension savings rather than saving in a separate care Isa or insurance plan.
“We remain to be convinced that we need further standalone products which can only complicate the saving landscape.”
Philip Brown, head of policy at LV, said the announcement in today's (8 March) Budget was positive for social care "because we’ve had several previous government initiatives that have never come to fruition."
He added it was the "perfect opportunity to get it right for everyone – people need to understand what the state funds and therefore where private provision comes in".
Steve Webb, Royal London’s policy director, called for the end of “decades of dithering on how to fund social care”, after 20 years of reviews of the subject.
“What was needed was political courage to implement a system which protects all families from potentially huge care costs and stimulates a market in care insurance for those who want greater security.”
He urged the government to commit to implementation of the Dilnot proposals “without further delay”.
The Dilnot Commission, chaired by Andrew Dilnot, launched on 20 July 2010, and was an independent body tasked by government with reviewing the funding system for care and support in England.
It provided recommendations on how to reform the system to government in July 2011, having uncovered a system in “urgent need of reform”.
Dean Mirfin, technical director at Keyretirement.com, also questioned the effectiveness of the government’s green paper on social care.
“The proposed green paper is welcome but following the years of work carried out in the past by Dilnot and heavily worked through by many sectors, it will be interesting to see whether this previous work will be lost forever,” he pointed out.
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eleanor.duncan@ft.com
