Alongside this, the CII also calls on the insurance industry to market immediate needs annuities to younger people, rather than at the point they are required as is currently the case. This would give people an opportunity to plan ahead for the possibility of needing care.
Existing products could certainly be used more effectively were users to have some insight into future costs. As an example, Steven Cameron, pensions director at Aegon, says that an individual would be able to ringfence future costs within their pension pot and live off the remaining funds.
“If someone is asked to pay £25,000 for a care insurance product when only one in four will need care, it is not very attractive,” he explains. “Knowing that the money will go to the next generation if it is not needed for care can be very reassuring.”
Early start
Bringing forward care fees planning is also supported by Jane Finnerty, joint chairman of the Society of Later Life Advisers. She says: “Advisers should include the potential need to fund for care costs in their at-retirement reports. It is a hard conversation to have, especially without any certainty on what they would need to plan for, but it is something they should be talking about with their clients.”
Without anything more concrete than the promise of a green paper, these conversations will remain difficult. However, while waiting for the paper to be published, it is positive that possible funding options such as those outlined by the CPS and the CII are discussed. “The more ideas, the better,” says Mr Cameron.
“This enables the government to test the waters, but also helps to depoliticise this issue, which will enable it to gain cross-party support for recommendations.”
Finding a sustainable solution to the social care funding crisis is essential. Exploring a variety of options ahead of the next green paper will help to give the government the confidence and insight to ensure its recommendations are the ones that will deliver.
