Pensions 

Govt considers auto-enrolment solution for social care

Govt considers auto-enrolment solution for social care

The government is considering the creation of a solution similar to auto-enrolment to solve the UK's social care crisis.

According to media reports, the proposal - which is expected to be one of several being addressed in the upcoming Department for Health and Social care green paper - would imply that every adult in England would be expected to pay into a national fund to cover their care in later life.

If such a policy was introduced, individuals would have to actively choose not to make payments to the social care fund akin to pensions auto-enrolment.

Auto-enrolment into pensions was introduced in 2012, and according to recent data from the Office for National Statistics (ONS), there were 8.8 million active members of pension schemes in 2017. 

Matt Hancock, Health and Social Care secretary, said: "I’m attracted to the model of auto-enrolment, which has been so successful in pensions.

"If you make it the norm, tell people what it is they have to do to look after themselves, it’s often the case that very few people will opt out.

"It takes away the injustice of people losing all that they have saved for."

According to a recent report commissioned by the Department of Health and Social Care public expenditure with social care is expected to soar.

The research showed the cost of social services for older people is projected to rise under the current funding system from about £7.2bn (0.45 per cent of GDP) in 2015 to £18.7bn (0.75 per cent of GDP) in 2040.

FTAdviser reported last week the government is planning to propose a new cap to fund social care in its upcoming green paper.

At a hearing in front of the economic affairs committee in the House of Lords on Tuesday (11 September), Chancellor of the Exchequer Phillip Hammond said the green paper would set out several proposals to reflect different ways of delivering and funding the cap.

Several solutions for the care funding problem are said to be on the table, including the ‘Care Isa’ – a capped savings product, exempt from inheritance tax – and a 'care pension', which mixes drawdown and care insurance.

It is estimated a mere 12 per cent of adults aged 55 or over are currently putting aside money to pay for their future care in the UK.

In December the government confirmed a proposed £72,500 cap on social care would be scrapped.

Former prime minister David Cameron had promised an upper limit on the amount people must pay towards their own care, following recommendations from the Dilnot commission in 2011.

But Mrs May's government said a green paper on long-term reform would be published this summer instead, which then got pushed back to the autumn.

The government has since hinted that the publication of the document could be further delayed, due to "unforeseen circumstances".

In the meantime, the House of Lords launched an inquiry into social care funding.