What is clear is there is no one-size-fits-all solution. An adviser may be able to tailor recommendations to the individual’s anticipated future income, wealth and expenditure using cash flow modelling.
Individuals might also seek advice on how best to generate an income in various stages of retirement, not just for tax purposes but with care costs in mind.
Broader tax considerations might suggest drawing income from non-pension assets while leaving funds in pensions, outside the inheritance tax regime. Of course, there is speculation the chancellor may have her eyes on that too.
In terms of social care funding, there are also special rules around which assets count or are disregarded.
Pensions ‘in payment’ are included as income, while the value of pension funds is generally disregarded from capital.
But if the client has chosen not to make withdrawals when they could have, the local authority can assess them as having a notional income.
So when adding in social care considerations, the relative merits of pension versus Isa versus equity release become more complex and could well change in future.
Intergenerational advice
Cap or no cap, for many, inheritance aspirations will be particularly important, increasing the merits of including not just spouses but younger family members in retirement planning advice.
This in turn may highlight other intergenerational advice opportunities.
Without the new capped deal, it is much harder to come up with a neat solution that ensures all funding is sorted.
Many clients may have read material suggesting they can reduce their liability through gifting.
Here, a clear understanding of 'deprivation of capital' is essential.
And most who do think ahead about funding future care will want to have choice over where they receive that care and need to keep sufficient funds to have that choice.
In conclusion, the immediate uproar following the chancellor’s ‘black hole’ speech may have been linked to losing the winter fuel allowance.
Longer term, I expect taking the social care funding deal off the table will be a far bigger issue.
I do hope the government will revisit this as part of developing its National Care Service.
Advice on social care funding can be highly valuable, but it is also very specialist.
Advisers with Solla accreditation specialise in later-life needs such as social care funding and Solla also offer training and CPD materials.
Steven Cameron is pensions director at Aegon
