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Can a state pension style system help solve the care crisis?

By Marc

The state pension is a long-established government benefit that provides a minimum standard of living for those who reach retirement age, but should the same apply for those who require long-term care.

Successive governments have been trying to reform the care system for years.

The most prominent proposal was the Dilnot report in 2011, which proposed that everyone should have to pay the first £35,000 of their care costs, with the state covering the remaining costs once that cap was reached.

It also suggested that the £23,250 threshold at which people become liable for the full cost of their care should be raised to £100,000.

But none of the proposals have ever been legislated for and no action has been taken.

A solution to the care crisis?

Now Conservative MP and former First Secretary of State Damian Green is proposing yet another new system.

He has written a report with the Centre for Policy Studies thinktank that suggests creating a system based on the state pension, where everyone would get a universal care entitlement and can then top that up with a care supplement.

This would be similar to the way a retiree would top up their state pension with private savings.

Under the proposals, the state would provide a Universal Care Entitlement, which could then be topped up by private support for those who want it via a Care Supplement.

The Universal Care Entitlement would be at a flat rate level of support adjusted for need, whether or not the care was provided at home or in a residential setting, and wherever the care home was located.

This would involve moving from the existing system – in which the state provides care via local authorities – to a nationally funded model, where the state pays this set amount for each week or month that an elderly person needs support.

Those receiving long term care could also top up their service by purchasing a Care Supplement – something similar to an annuity or insurance policy – which ensures that money for more expensive care is available if needed.

Green is no longer a government minister so there is no guarantee that his proposals will be listened to.

It is still worth preparing for your retirement and ensuring your pension and any savings can help look after you in your golden years, especially if you require care.

Speak to your financial adviser about your pension.

  • The value of an investment and any income from it can fall as well as rise and you may not get back the original amount invested.
  • Past performance is not a reliable indicator of future performance and should not be relied upon.