The long awaited social care green paper must factor in individuals’ attachment to their home when considering how to fund later life care, according to Aegon.
The publication of the social care green paper was originally expected in the summer but has faced several delays. The government has now said it will become public "in due course".
A global retirement survey carried out in 15 countries from Aegon, published on June 20, found that people in the UK have a strong desire to maintain their independence as they get older.
Three quarters (74 per cent) of UK respondents said it was very or extremely important to them to remain in their own home.
This compared to 58 per cent of people in the Netherlands and 43 per cent in Japan saying the same.
According to the survey, 40 per cent of people in the UK stated that losing their independence was a retirement concern, with almost a third (29 per cent) of respondents concerned about needing to move into a nursing home.
Due to the delay of the green paper it is still unknown whether individuals’ properties will be taken into consideration when determining how much they will have to contribute towards care costs.
Aegon stated the increase in life expectancy was allowing people to redefine their working years and time spent in retirement but the downside of this was an increasing number of people might need social care in later life.
According to research from the Institute for Fiscal Studies (IFS) published in 2017, by 2025 it’s predicted that 2.8m people over the age of 65 will require nursing and social care.
However, Aegon has warned that government must not focus its attention solely on residential care and must also consider funding for domiciliary care to allow people to continue to live in their homes.
One third (33 per cent) of people in the UK plan to have bathroom modifications in their home as they get older, followed by home security systems and panic buttons to call emergency services (both 27 per cent).
Steven Cameron, pensions director at Aegon said: "Increased longevity is a point of celebration, but a consequence of living longer is that people need to have adequate funds to support their longer lives and with increasing numbers facing the need for social care, plans need to be put in place to fund it."
He added: "The funding of social care is an emotive subject, but there’s a very audible message that people want to remain in their home, rather than having to sell it as a means for paying for residential social care. This needs to be factored into the government’s solution for stable and sustainable social care funding.
"Individuals need to have a clear understanding of what they’ll be expected to pay should they need care and there needs to be an overall limit or ‘cap’ on their share of care costs.
"We need to ensure that incentives are in place for people to plan ahead for an event which could be 20 or more years into the future."
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.
As part of the Centre for Policy Studies’ social care funding review, published on April 29, MP Damien Green suggested that people should be able to purchase a care supplement, which would be similar to an annuity or insurance policy, to ensure individuals have funds for more expensive care if needed in the future.
This money would come from individuals’ existing pension pots, lifetime savings or via equity withdrawal from people’s homes and would act as a top up to government funded state care.
Mr Green said: "The individuals who are now reaching the age of 60 are the generation who have a huge amount of housing wealth. These people are worried about having to sell their home in order to pay for their care in later life.
"The care supplement is designed to address these fears by giving individuals the option to give up only a small part of their housing wealth and in return they get peace of mind that they will receive top of the range social care. They will also have the rest of their housing wealth to leave as inheritance, which is an attractive offer to this age group."
amy.austin@ft.com
What do you think about the issues raised by this story? Email us on fa.letters@ft.com to let us know
