“Life expectancy in the UK is on the increase and this new report highlights that the number of people needing to access long-term care services will increase by 1.1 million by 2025; an increase of 37 per cent. The annual cost of long-term care is expected to rise to £33,000 per person.
“Despite successive governments discussing reforming care funding, nothing has happened and this is a ticking time bomb. Government doesn’t have the means to pay for the care of an ageing population. And as a result of poor financial advice and planning, people are facing face escalating care costs. I highlighted this issue 21 years ago when I met with politicians to discuss the need to put in place better plans for funding retirement needs.
“Back then, I wrote a white paper suggesting a ‘Care Home’ bond, where people could invest in their future, by selling their property and putting some or all of the proceeds into a government backed bond. Bond holders would have access to suitable accommodation, provided by the bond administrators, plus an income for paying for care services as required.
“21 years on, nothing has changed. Governments have failed to put reforms in place despite institutions and experts involved in the care of the elderly predicting this would be the situation years ago.”
The LV= survey revealed that the UK population is failing to plan for later life. While a quarter of adults expect an elderly relative to need long-term care in the future. Less than one in ten people plan to look after their loved ones themselves to avoid paying for care, just half of those expecting to fund care for others and the remainder not having thought about how they will pay for it.
Nearly one in five adults believes they will have to fund the cost of their own long term care in the future. Nearly a quarter said they would use their property to pay for care, either through equity release, remortgaging or selling their home. Just under a fifth of adults said they would use savings or their pension income.
Under the current system those in residential services in nursing and care homes with assets worth over £23,250 are not eligible for Government support. The LV= research indicates that the average wealth, including assets such as investments, savings, property after mortgage, of those over age 55 is just £32,500 indicating that under current rules; many won’t get any help from the state at all.
Peter Girling says “We believe the government needs to act now and put in place better plans that will enable people to meet the financial costs of later life. We suggest something similar to what I talked about in 1991, whereby the elderly could be encouraged to sell their homes in later life to release equity to invest in a retirement bond, backed by the government and appropriate tax incentives. This could be a flexible bond that could pay income for people to rent a property or pay for care as their needs change.
“But for this to work, government must address the shortage of suitable housing for the elderly. The UK is suffering from a major shortage of quality retirement homes. The many new build schemes being launched by the government to provide family homes by and large are unnecessary and could be supported by the release of under occupied family accommodation. Previous efforts by successive governments have failed to kick start the housing market and government has also failed to take into account the provision of purpose built retirement housing, which is a big mistake.
“We urge government to release local authority land to build suitable retirement homes and will continue to lobby on this issue until we are heard. We have seen enquiries for our retirement rental properties rise by 32% over the past few years together with a growing demand for more diverse housing options. The government simply isn’t listening.”
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