Improvements in healthcare and living standards have resulted in the UK population living longer and the Office of National Statistics estimates that by 2030 the number of people aged over 85 will have doubled.  This trend has led to an increasing requirement for care support, whether at home or in a residential setting.

A survey by independent Consultants Laing & Buisson in 2012/13 found the average cost of care fees across the UK is approximately £542 per week which is significantly higher than many older people’s income. The survey also identified that over 50% of people pay in full or part for residential care and 24% of those who initially fund their own care exhaust their finances and fall back on state funding.

In response, the Government set up the Dilnot Commission which reported in July 2011 and called for a cap on the amount people have to pay for care. The result is draft Care & Support Bill which is currently going through Parliament and proposes the biggest transformation to care and support law in over 60 years.

The Bill proposes three key reforms which, if approved by parliament, will be implemented as follows:

  • A cap of £72,000 on the amount people will be required to pay for care costs (but note no cap is proposed on accommodation costs).
  • An increase in the means-tested thresholds from £23,250 to £27,000 for those whose home is not included in the financial assessment and to £118,000 for those whose property is taken into account.
  • A deferred payment system which aims to ensure that no-one will have to sell their home during their lifetime to pay for care (but note this just defers a sale until after their death).
If implemented the reforms may help some people but it is clear that many people will still need to make a substantial contribution to their care costs and the future of state support remains uncertain.
The complexities mean that professional advice can be invaluable. It is important that an holistic approach considers income generation, capital preservation, investment strategy, tax mitigation, care fees planning and estate planning.  Not all Financial Advisers have the required knowledge and experience but at WBW Chartered Financial Planners, we have specialists who deal in this area.  Two of our advisers are accredited by the Society of Later Life Advisers.  You can contact Louise Osborne or Dave Robinson of the WBW Chartered Financial Planners by emailing louise.osborne@wbw.co.uk or by telephoning 01626 202 404.