Drawdown  

Govt considers drawdown-linked care insurance

"But it is not clear how an insurance product would work for drawdown. Care insurance has been tried many times, but has not proved a success."

She explained: "Either it has been problematic for the customer – who finds they don’t get paid out as they’d expected – or it has been problematic for the insurer – who finds they make losses as future costs spiral beyond expectations."

According to Nathan Long, senior pension analyst at Hargreaves Lansdown, "the answer to the care problem is not going to be found by allowing pensions to be more efficiently raided to pay care costs".

He said: "Most retirees are battling with making sure their pension lasts as long as they do, long term care funding just isn’t a consideration for them.

"Tax efficient access to pensions could form part of a solution to the long term care problem, but they’d be putting the cart before the horse to make any short term changes before a grand plan was devised."

maria.espadinha@ft.com