While it is welcome that the industry has more clarity on the government's plans for social care reform, it is unlikely there will be any new products in the immediate future due to timing issues, specialists have said.
Speaking on the latest FTAdviser podcast, Steve Webb, former pensions minister and partner at LCP, said the industry will need more time to come up with new initiatives and products to be used for social care.
Webb said: “It is not that the government says something a bit vague one week and three weeks later, there's a new product launched.
“Firms have got a big pipeline of stuff that they are working on with much more mainstream products, so actually coming up with a brand new product, testing it, getting the regulatory approvals, getting the IT systems, thinking about marketing channels, and so on, is a work of years.
“So I don't think there'll be any new products, imminently.”
He added: “You just can't design a financial product against a background of uncertainty. So I think the sort of products I am talking about, these being actual insurance products, are probably years away, but we could see modifications of existing ones.”
Announced last week, the government’s policy will place a 1.25 per cent increase on national insurance contributions, alongside a 1.25 per cent dividend tax, in order to pay for a social care cost cap.
The planned cap for people entering care from October 2023 will mean any care costs over £86,000 will be covered by the government – provided the individual's assets sit under £100,000.
Also appearing on the podcast, Tony Mudd, divisional director for tax and technical support at St James’s Place, said there will now be a greater need for advisers, but added people need non-regulatory advice first to explain to them about the social care system and how it works before getting into the financials.
Mudd said: “Non-regulatory advice realistically has to come first before an adviser can actually safely provide someone with an idea of how they may best effectively pay for care, and also deal with the transfer of assets to the next generation, which a lot of elderly people are really keen to do.”
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