Long Term Care : keeping it in the family
With recent estimates suggesting state residential care facilities are underfunded to the tune of £700m** a reliance on the government to look after you or your elderly relatives is increasingly unrealistic.
The difficulties facing the sector, coupled with the heightened emotions frequently associated with looking after ill or fragile relatives could test even those in quite privileged positions. Conservative MP Peter Bone was recently exposed as facing criminal investigation over claims of £100,000 benefits fraud in a dispute over his mother-in-law’s care home fees. The case hit the headlines and long term care returned to every day conversation.
State care is a means-tested benefit, with different thresholds depending on where you live. Excluding your home, your personal assets need to be valued at a certain level, above which you are expected to pay for your own care requirements. Whilst the threshold figure varies across the UK, in England it is currently £23,250 whilst Scotland is much more generous.
Campaigns are in place by charities like Age UK to raise the thresholds and a government consultation is underway regarding imposing a £72,000 cap on lifetime care costs per individual and help reduce the likelihood that people have to sacrifice their homes in order to release funding. The details have not yet been released but reform looks set to come in from next year.
The industry is heavily involved in the consultation period which may result in new product development with specific care funding objectives .Currently, common routes include the purchase of an ‘immediate needs’ one-off lump sum, or a basic or enhanced annuity, equity release or other regular savings vehicle. With more flexible pension savings having been announced, having an effective plan and knowing how much and when to start putting it into effect is vitally important.
Like many things financial at the moment, this is an area undergoing change. And like all things financial, if you are a relative or likely to be affected, getting to grips with the current situation and figuring out how much needs to be set aside is better done sooner rather than later. Your financial adviser can help.
** Source : Independent Age, November 2013