Category: Long Term Care


Protecting your home from care home fees

As you grow older, one of the things you might be most concerned about is the entire value of your home disappearing on paying care home fees.

Care from the NHS is free, but if you need social care because you are physically or mentally frail, you will have to pay for it yourself.

Over recent years, fees for care homes have risen rapidly. Research has found that Britons pay £10.9 bn of their own money into privately funded care a year. According to market intelligence provider, LaingBuisson, the average bill was £844 a week in 2018, compared with £445 a week in 1998.

If you have more than £23,500 in property, savings and investments, you will have to pay the full cost of care yourself during your lifetime and, if necessary, from your estate after you have died. This may not leave much for your family to inherit. Help from the local authority is available but it is strictly means tested, which results in very few people qualifying for financial help. (The value of your home is not considered in your means test if you or your spouse or a dependant is living there).   

To avoid paying for their social care in the future, some people take steps to get rid of all their assets but this may mean they could end up in a less luxurious care home than they had hoped for. 

Is using a trust an option?        

You may have heard of people protecting the value of their assets and property by putting them into a trust. If this is done before they go into care, the home is not part of their capital and they cannot be required to use it to fund their care fees. Great care needs to be taken, however, around the timing of this.The Local Authority can view such a step as ‘deprivation of assets’ if they feel the intention is to avoid paying care fees and refuse funding as a result.

If you are considering using a trust, it is vital to get professional advice from a solicitor and make sure it is suitable for your individual circumstances. In some cases, there might not have been much benefit. Your income might have been enough to pay most or all of your care fees anyway. The level of your other capital may have been enough to meet the shortfall between your income and the fees for the length of your stay in care.

There were plans for the government to bring in a cap of £72,000 for care home costs in 2020, but these have been scrapped. In the recent Spending Review, an additional £1 billion for adult and children’s social care was announced by Sajid Javid, although it is yet to be seen what that will mean in practice.


How to approach later life care

National Insurance contributions go towards things like your State Pension but they don’t count towards the costs of social care. This type of care is managed by your local authority and generally comes at a price. That is why you have to apply directly to them if you need help with paying for long-term care. Your local authority (or Health and Social Care Trust in Northern Ireland) will first carry out a Care Needs Assessment to find out what support you need.

The next step is to work out who is going to pay. Your local authority might pay for all of it, part of it or nothing at all. Your contribution to the cost of your care is decided following a financial assessment. This Means Test looks at:

  • your regular income – such as pensions, benefits or earnings
  • your capital – such as cash savings and investments, land and property (including overseas property) and business assets

If your income and capital are above a certain amount, you will have to pay towards the costs of your care.

If you own your home, the value of it may be counted as capital after 12 weeks if you move permanently into a residential care or nursing home. However, your home won’t be counted as capital if certain people still live there. They include:

  • your husband, wife, partner or civil partner
  • a close relative who is 60 or over, or incapacitated
  • a close relative under the age of 16 who you’re legally liable to support
  • your ex-husband, ex-wife, ex-civil partner or ex-partner if they are a lone parent.

Your local authority or trust might choose not to count your home as capital in other circumstances, for example if your carer lives there.

The maximum amount you have to pay towards your care is different, depending on where you live in the UK. The cost of living in residential care can be split into:

  • your ‘hotel’ costs, including the cost of accommodation and food
  • your personal care costs.

The cost of care differs around the United Kingdom, and this cost is usually higher where employment costs and housing are more expensive. In England and Wales you can find out how your local authority charges for the care services by first visiting the local authority website. In Scotland, the personal care you receive in a care home is free, if you’re over 65. If you’re in Northern Ireland, you can find your local Health and Social Care Trust on the nidirect website.

The one certainty of care is that, should you need it (and many of us will), you will be in a better position to receive exactly the sort of care you would like if you have some of your own funds set aside to cover the cost. Like the relationship between your state pension and your private pension, the former will only support you to one level. We save into additional pensions to ensure we have the retirement that we want. The same rules could really apply to our approach to care funding.

Sources: (Published information)


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The New Proposals on Long Term Care and what they mean for your Financial Planning

In the Spring of last year retirement specialist LV= produced a report looking at the future of long term care in the UK. With increased life expectancy, LV= predicted that the number of people needing care – either in their own home or in specialist retirement homes – would surge by the year 2025, reaching 1.1 million, an increase of 30% on the current figure of 840,000.

With the cost of care also set to increase from the current average of £26,000 per year to a predicted £33,000, the burden on the UK economy – and hence on a decreasing proportion of taxpayers – is set to be prohibitive. How can the country afford it?

And yet… Is it fair that someone who has worked and paid taxes all their life should then have to sell their home to fund the cost of long term care?

This problem – and the apparent difficulty of squaring the circle – has clearly been known about for some time, and in 2010 the Government commissioned economist Andrew Dilnot to look into the whole issue of long term care. Essentially Dilnot was asked to find a way of protecting people’s assets against the cost of long term care – whilst at the same time ensuring that the country didn’t face an impossible bill.

Dilnot recently made his recommendations, which were accepted by Health Secretary Jeremy Hunt, ‘with some slight tweaks.’ So what are the recommendations? And what implications do they have for your long term financial planning?

The three main recommendations:

Dilnot’s first recommendation was a cap on overall care costs, so there is a limit on the total amount that anyone can pay in his or her lifetime. Dilnot had recommended that the cap be between £30,000 and £50,000: in fact the Government decided that the figure should be higher, with the cost of care capped at £75,000 during an individual’s lifetime.

The cap does not include the cost of accommodation – it is the cost of care only. So if, for example, someone was paying £700 per week for long term care, made up of £400 per week residential costs and £300 per week care costs, only the £300 would count towards the cap.

The second change is an increase in the means-tested threshold. At the moment anyone with assets in excess of £23,250 must pay towards the cost of their care. Dilnot had proposed increasing this to £100,000 but the Government have moved it still further, to £123,000. However, if your assets exceed this figure then you are not eligible for any state help until you have passed the ‘cap’ of £75,000.

It is important to note that for those people needing care at home – a substantial number – the threshold will stay at £23,250.

Finally, no-one will now need to sell their home to pay for the cost of care. This has always been an unpopular piece of legislation, and Dilnot has proposed a scheme to allow fee payment to be deferred in a person’s lifetime. This ‘universal deferred payment’ will be introduced in 2015, and will allow people to borrow against the value of their home with the estate then paying back the loan (plus as yet undecided interest) on death.

When will the changes be introduced?

In the main these changes will be introduced in 2017, apart from the universal deferred payment as described above. Until then the current rules will apply to anyone going into care.

What do they mean for your financial planning?

By and large, the changes are to be welcomed. But do they remove the need for financial planning where the costs of long term care are concerned? Far from it. The cap on costs was essential: we have long felt that it is wrong for a person to face an open-ended bill at the end of their life. Likewise the rise in the threshold – but £123,000 is only equal to the cost of a very small home, so we suspect that this move may not make a lot of practical difference.

We have some reservations about the ‘universal deferred payment,’ particularly the as yet unannounced interest rate. If it is linked to inflation (as the rate of interest on student loans is) then it could see substantial amounts of interest being paid.

We would still urge anyone who feels that they may need long term care – or who has elderly relatives who may need long term care – to talk to us about financial planning. The Dilnot proposals are welcome, but for many people – particularly high net worth clients – they may make little practical difference.

If you want to choose the quality of your long term care, and want to be certain that you will pass on as much of your estate as possible to your beneficiaries, then proper financial planning remains an absolute essential. These proposals, welcome as they are, have done nothing to change that.


Contact us on 01737 225665 or


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Financial Planning in your fifties, sixties and seventies …

Last month we looked at basic financial planning in the early part of your life – through your twenties, thirties and forties.  If you missed it just click on this link Financial planning in your twenties, thirties and forties 

What about the second stage of life? It’s easy to assume that all the major changes in life – finding a job, marriage, a family – take place in the early years. In fact there are just as many major changes in later life and the need to keep on top of your financial planning is, if anything, even greater.

In your fifties

Along with your forties, your fifties are almost certainly the age when your earnings are at their peak – and by now there’s a good chance that your children will no longer be dependant, giving you the chance to take two important financial planning steps.

First of all, your fifties are the time to maximise your savings ready for retirement, and to make sure that they are invested as tax efficiently as possible. The right action now could make a lot of difference when you eventually retire, whether it is in maximising your pension contributions, or opting for the flexibility and tax efficiency of Individual Savings Accounts.

A good independent financial adviser will be able to prepare you a ‘lifetime cash flow’ forecast showing how much cash is required for your ideal retirement – and how much you need to save in order to guarantee it.

If your income allows it, your fifties is also a good time to reduce debt, be it long term debt like a mortgage or shorter term debt like credit cards. Conventional financial wisdom dictates that you should almost always pay off the debt with the highest interest rate first – which would normally mean paying off your credit cards before your mortgage. But for many people the allure of being mortgage free is a very powerful motivating factor: in addition there’s always the danger that if a credit card is paid off it can be built up again – especially with the winter winds of February making a week or two in the sun seem almost irresistible.

For may people their fifties are the decade in which they inherit wealth from their parents. If the amount is significant then specialist financial planning advice is always a good idea – there may be a choice to be made (or a balance drawn) between saving, spending and reducing debt with any sum that you’ve inherited.

In your sixties

If you’re planning to work on and retire in your mid-sixties or later, then the early part of the decade should simply be a repeat of your fifties: continue to save, reduce debt and work with your financial adviser to keep your plans on course.

However, at some time in our sixties the vast majority of us will retire – at which point some serious financial planning needs to be done. The options around taking your pension can be many and varied, whether it is deciding how to take your income or deciding how to invest any tax-free lump sum you receive. The options at retirement are outside the scope of this article, but retirement is a time when working with your financial adviser is crucial: the decisions you take now could well affect your standard of living for the rest of your life.

Your sixties may also be a decade where you start to think about your long term health and any care you may need in later life. There are very few of us that reach our sixties without some health worries along the way and it may be that private medical insurance or long term care planning are all subjects that you now start to think about.

If you are wealthy, then your sixties are also the decade in which you may need to start considering inheritance tax and ways in which you can protect your estate against the tax man. As above, there are several different routes you can go down but the first and most sensible option is to take independent financial advice from an expert.

In your seventies

To a great extent financial planning in your seventies will be dictated by your health. Hopefully your income for the rest of your life is now secure and, if you are wealthy, you may also be able to look at giving away some of your income and/or wealth to reduce an eventual inheritance tax bill.

Essentially, your seventies are a decade in which to relax and reap the rewards of a lifetime of sensible financial planning. Continue to have regular meetings with your independent financial adviser and continue to take all the prudent steps with regard to tax efficient investment and savings. But above all, the message for your seventies is simple: “You’ve worked hard: you’ve planned your finances: now enjoy it!”

As with last month’s article, this look at financial planning through the second stage of your life can at best only be a general overview. As always, if you would like any more  information or advice on any of the topics covered, please don’t hesitate to contact us on 01737 225 665 or


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What is a Lasting Power of Attorney?

A Lasting Power of Attorney (LPA) lets someone as the donor, appoint someone else to make decisions on their behalf. There are two types of LPA, a Property and Financial Affairs LPA and a Personal Welfare LPA and they are normally used when someone is unable, or is likely to become unable, to make their own decisions. The donor can choose to make one type of Lasting Power of Attorney, or both.

A Property and Financial Affairs LPA can be used even if the donor has the mental capacity to manage their own financial affairs, but it must be registered at the Office of the Public Guardian first. The Lasting Power of Attorney (LPA) replaced the old system of Enduring Power of Attorney (EPA) which was discontinued on 1 October 2007, although pre-existing EPAs are still valid.

If you are seeking to establish an LPA appointment or have been granted an LPA or an EPA you can obtain guidance and information from the Office of the Public Guardian customer services. If you are wanting as an LPA or EPA, to engage in financial transactions, for example like negotiating an equity release plan, seek independent legal or financial advice regarding your status and your right to represent the donor in those financial transactions. Individual lenders or product providers may or may not deal with EPA or LPA holders as bona fide representatives, so you will need to ask them about this before entering into any transaction on behalf of the donor.

The Personal Welfare LPA allows the donor to choose one person or more to make decisions about things like their daily routine (eg eating and what to wear); medical care; moving into a care home; refusing life-sustaining treatment. The Property and Financial Affairs LPA lets the donor choose one person or more to make decisions about money and property for them, eg: paying bills; collecting benefits; selling their home.

The donor can choose one person or more as their attorney, to make decisions on their behalf. In choosing an attorney (LPA), the donor should consider how well the person looks after their own affairs, how well the donor knows and trusts them to make decisions in the donor’s best interests and how happy they will be taking on the responsibility.

The attorney can be anyone 18 or over, eg. a relative, a friend, a professional (like a solicitor), a husband, wife or partner. The donor can’t choose someone who is under 18; is unable to make decisions; has been declared bankrupt (if they are wanted to look after property or money).

A Lasting Power of Attorney can only be used once it’s been registered with the Office of the Public Guardian. You can register a Lasting Power of Attorney if you’re the person who needs the attorney – you must be able to make your own decisions when you register. It can take up to ten weeks to register an LPA with the Office of the Public Guardian and it is necessary to check that anyone named in the application should be told and given at least five weeks to raise any concerns.

It costs £130 to register each Lasting Power of Attorney, while registering both types of Lasting Power of Attorney costs £260. If the registration form is returned because it is found to be incorrectly filled in, this will cost a further £65. However, you may not have to pay the fees if you’re on means-tested benefits or a low income, and information about this and other general guidance can be obtained from:


Should you be interested in more information please do not hesitate to contact us on 01737 225665 or

Funding Care Home Costs – the problems posed for both families and practitioners

Michael Young, Chairman of STEP Worldwide, 9 January 2012

The issue of how we fund care home costs in England and Wales has been a politically contentious one for years. One in three women and one in four men are likely to need long-term care, yet few see the current system – which can see someone’s home and life savings liquidated and used at the behest of a local authority to pay for care costs – as being fair.

The Government established the Commission on Funding of Care and Support chaired by Andrew Dilnot to look at the issue. In its report the Commission made firm recommendations for radical reform to a system it has described as “confusing, unfair and unsustainable”. One of the key aspects of the suggested reforms was the introduction of a ceiling on the amount any individual could be expected to contribute towards long-term care. Unfortunately, however, there seems to be little political appetite at present to push through such reform. Indeed the latest indications are that reforms could be many years away. Given the current economic climate and the rather parlous state of many local authorities’ finances that is perhaps unsurprising.

The result however is that both families and the STEP members who advise them are left struggling with a legal and regulatory framework around the issue of care home fees which is generally recognised to be badly in need of overhaul and which is patchily and inconsistently applied by local authorities.

Against this background there is growing anecdotal evidence that an unscrupulous minority of so-called advisors are exploiting the fears and uncertainties created by the current system to misuse products and structures and sell them aggressively as a means of avoiding liability for care home fees – ignoring the fact that, at the end of the day, the arrangements promoted might well fail to do anything of the sort.

The current law rests on an intentions test, something which is always likely to cause problems and complications. While there are many very valid reasons for thinking about estate planning, if arrangements have been entered into with the intention of avoiding liability for care home fees they can be set aside by the courts and local authorities can take the assets to pay for care costs. Proving intention is never easy, however, and in practice we seem to have arrived at a situation where many local authorities do not take action unless arrangements are set up very shortly before someone needs to enter into care.

Even so, the current “blind-eye” adopted by many local authorities to schemes aimed at avoiding liability for care home fees might well change in the future. Funding pressures may force local authorities to take a more aggressive stance. Indeed, as the popularity of such schemes grows, it can only add to the pressure on local authorities to take firmer action. It is essential therefore that we consider the issue of what will happen if there is a change of attitude on the part of the authorities towards the use of trusts and many of the other mechanisms used to avoid care home fees.

The first thing to say is that many of the clients who have spent time and money taking action which they believed was protecting their savings are likely to be angry and disappointed when they find that it hasn’t worked.

Second, disappointed clients might well want to try and blame someone, and, however clear the warnings given to them at the time, they may blame their advisors. There is therefore a clear risk of reputational harm both to the profession and to some of the widely used but occasionally abused structures used in this area such as trusts.

Third, unless the warnings given by advisors about the dangers inherent in such schemes have been very clear indeed, there is every chance that irate clients will seek compensation. If such claims succeed that could be very expensive for the profession, but even if they do not, the experience of other industries is that waves of compensation claims when “a product fails” are both extremely expensive to process and very damaging to reputations.

Against such a background I believe STEP members should proceed very carefully in any discussions with clients about how to fund or avoid care home fees. Certainly in my view, any reputable advisor should be very wary indeed of promoting any scheme aimed at avoiding liability for care home fees. Indeed, given the uncertainties about both the practical application of the current rules and what will be the shape of any reformed scheme – likely to be introduced at some point currently unknown but very probably well within the lifetime of any arrangement set up today for a client – I simply do not see how any advisor can give well-based recommendations to their clients in this area. Relying on a local authority to turn a ‘blind-eye’ to an arrangement designed to circumvent the ‘capital adequacy’ rules in relation to liability for nursing home fees seems to me to be a very poor basis on which to advise a client.

What if a client approaches their advisor about such a scheme, perhaps because they have seen publicity or heard about them from friends? This, I know, is a situation many STEP members have encountered. In such circumstances the advisor has a clear duty to the client to explain carefully and fully the potential pitfalls. Should the client wish to go ahead in any case, it would be prudent in such circumstances to ensure that the warnings given had been very carefully documented and acknowledged by the client.

One of our major banks recently hit the headlines, receiving the largest ever retail fine from the FSA and being required to foot a large compensation bill. HSBC’s mistake had been to give inappropriate advice to elderly clients regarding long term products designed with care home fees in mind. I think it is fair to say that if one of our major financial institutions can get it so expensively wrong in this area, every STEP member giving advice to the elderly about care home funding should also be looking very carefully at the procedures they have in place.

My core conclusion, however, is that the situation that has now been created around funding the costs of long term care creates an impossible position for everyone – local authorities, the public and advisors alike. The latter involved in the highly laudable process of trying to make sensible and responsible financial plans for the elderly. We have a current legislative framework which few support, not least because it creates a post-code lottery based on the attitudes of local authorities. Surely it should not be possible for local authorities to pick and choose what legislation they will enforce and what they will ignore. Such an approach is hardly equitable.

Alongside the uncertainties created by such a framework there is the prospect of future, as yet unspecified, fundamental reform which whilst undoubtedly needed, could very easily make any plans drawn up now pointless or ineffective. STEP will be writing to Ministers urgently, highlighting the difficulties now being created for those wanting to make plans for their later years and urging a rapid clarification of the current legal and practical uncertainties.

Source – STEP Michael Young – Click here for Press Release



Ten New Year’s Resolutions for your Financial Planning

Around 50% of us make New Year’s Resolutions and ‘sort the finances out’ must be one of the most popular: but that’s a little vague – it’s more a wish than a firm commitment to take action. Looking at the January appointments we’ve had with new and existing clients, here are the topics that we’ve discussed most often. If you’re determined to sort out your finances, these may give you some food for thought.

1. Sort out the mortgage

The mortgage is the biggest monthly expense for the vast majority of people, and making sure that the rate you’re paying is competitive is basic common sense. Many people are paying a higher rate than they need to and half an hour with an IFA or independent mortgage broker can be time very well spent. Yes, there are costs involved in moving your mortgage, but these can often be outweighed by the savings to be made.

2. Sort out our life cover

This is an absolute priority, especially if you have children. Many people don’t know the answer to questions like ‘how much life cover do I need?’ ‘How much do I have?’ ‘Does it include critical illness cover?’ No-one likes to think about the possibility of being seriously ill or dying, and therefore we tend to neglect our protection policies. Life cover can be surprisingly inexpensive: and even if you do have cover in place, make sure you have it checked on a regular basis. In many cases the cost of protection is continuing to fall and it may be possible to replace old policies and increase the amount of protection you have, without increasing your premiums.

3. Start saving for the children

However much you’ve just spent on Christmas presents, your children are going to cost you a lot more in the future. Whether it’s university tuition fees, a first car, your daughter’s wedding or the deposit on a house, the numbers are only going to go one way. Even if you only save a small amount, doing it on a regular basis over a long period can make a significant difference – and with the ability to save tax efficiently through an ISA, at least the taxman will be on your side.

4. Start saving for ourselves

What’s true for the children is equally true for yourself; if there’s a specific savings target you have in mind, or whether you simply need to save for the proverbial ‘rainy day,’ the earlier you start to save the easier it is to achieve your goal.

5. Sort out my pensions from previous employment

Many people have pensions left over from previous jobs, and despite various Government initiatives aimed at simplifying the system they still don’t have an accurate idea of how much is in their pension ‘pot.’ Good pension planning is impossible without knowing the position you’re starting from, so it’s a sensible idea to talk to an IFA and find out the position with any old pension policies. For example, can they can be brought together and simplified?

6. It’s time I understood the company pension scheme

Just as importantly, far too many people don’t understand their existing company pension scheme. Is it final salary? Money purchase? Eightieths? Sixtieths? Can I make additional contributions? Buy extra years? Again, half an hour with a knowledgeable independent financial adviser will be time well spent. He’ll be able to summarise the main benefits of the scheme for you, tell you the sort of pension you’re likely to receive and advise you of the best course of action if you want to improve your pension benefits.

7. Investigate Inheritance Tax and Long Term Care

If it’s the case that your parents are elderly, then it may be worth thinking about Long Term Care planning. Similarly if their – or your – estate is likely to be subject to Inheritance Tax, then action taken now could pay significant dividends in the future. Again, an IFA will be able to tell you what’s possible, and the steps that could be taken now to prevent an unpleasant surprise in the future.

8. Look at Private Medical insurance

With tales of woe from the NHS continuing – and more economies seemingly still to be made – many people are starting to look at the option of private medical insurance. This may be an investment worth making, particularly if you run your own business and would need treatment at a time to suit you.

9. We need to sort out the partnership insurance

Many businesses are run as a partnership (whether it’s a straightforward partnership or through equal shares in a limited company). The death or serious illness of one of the partners could have catastrophic consequences for the business – and serious implications for the other partner. And yet very few businesses have addressed the simple question of partnership assurance. Your IFA will be able to explain the basic rules to you and give you an idea of what protection might cost: you may well be pleasantly surprised!

10. We need to make a will

Last – but by no means least – make sure that you have an up to date will. The consequences of dying ‘intestate’ (that is, without a will) can be severe, and with a simple will being relatively inexpensive it’s sensible to make sure that this area of your financial planning is kept up to date.

So there’s plenty to think about… and at Concept we always say ‘make a plan’.  You if do not have a financial plan you will never reach your goals.  We are all working longer and harder – but is your money working for you?

If you would like to discuss any of the above points – or any other aspect of your financial planning – then as always, please don’t hesitate to contact us on 01737 225665 or


Affording care in later life

Aviva’s latest Real Retirement Survey Report shows that 70% of over-55s do not believe they should pay for care and the majority (81%) are either worried, concerned or terrified about meeting care costs if they are not provided by the state.

Currently, the state offers no help with care costs to individuals with assets in excess of £23,250. Many pensioners end up being forced to sell their homes in order to pay for extra support.

When asked, those over 55 who felt they should make a contribution to care thought this should be an average of £3,600 for a lifetime of care, which is far less than a typical annual bill for supported care.

In reality, typical care costs for just one year are currently about £35,000. While the majority of over-55s would prefer not to pay for care, they do concede that it is unlikely that the State will be able to pay for everyone’s care. The most popular funding options were for the ‘better off’ to contribute to the cost of their own care with the Government picking up the tab for everyone else (51%) or for those who can’t afford to contribute to the cost of care (36%).

How affordability is determined was a matter for debate with some suggesting it should be based on current assets (16%) and others feeling lifetime income (14%) should be the yardstick. Irrespective of what system was used, more than half (53%) said there should be a cap on how much an individual was forced to pay towards their own care.

More worrying is that the Aviva survey found that the more immediately pressing concern among pensioners is battling rising inflation and falling incomes. Researchers found that the 75-plus group have been worst hit by falling interest on savings and the rising price of gas, electricity, rent and food. The average monthly income among over-75s fell below £1,000 in September 2011 for the first time since the Aviva Real retirement Survey Project began tracking pensioner incomes two years ago.

The cost of care is a significant worry among the elderly, according to the survey, which found that 12% of the over-55s are “terrified” of the potential bill, with only 2% saying they had plans in place to finance care in their retirement. There is some hope that the situation might change, with the recent report to the Government by the Dilnot Commission recommending that the threshold for people requiring to pay for care should be set at £100,000, with a lifetime cap on care fees of £35,000. However, all this is in the context of the present state and the future of the UK economy and the Government’s policies and priorities.

This is an area of complex advice with low interest rates and many people being asset rich and cash poor to be able to develop a plan, together with all the emotions of a new way of living, there is more than one solution and many times multiple soultions will form part of the plan – careful professional advice should be sourced.


See our guide on Long term savings here




Living to 100 ?

It has long been accepted that improvements in medicine, lifestyle and an understanding of the effects which habits such as smoking can have on our health means life expectancy is increasing. Future generations are likely to enjoy much longer and healthier lives on average than their predecessors.

However, figures released in April 2011 by the Department of Work & Pensions illustrate more accurately exactly what that means. These figures suggest, of the under 16s already alive today, over a quarter are going to reach the age of 100 – and already, the average new-born female is going to live to over 90.

As Steve Webb, Minister for Pensions, commented at the time, this means that millions of people will spend over a third of their life in retirement. However, as the DWP were quick to point out, this news also coincides with a period during which pension savings are in serious decline.

An ageing population is putting our welfare system under significant pressure as more people need not only pension income but also healthcare, incapacity support and help within the home. You can therefore have little expectation that a State Pension will provide anything other than a safety cushion when the time comes. If your retirement plans include holidays, visiting relatives and treating yourself on occasion, then its time to take control of your savings and start building up a retirement fund of your own.

The Dilnot Report – what it means for your long term care planning

This month has seen the publication of the long awaited Dilnot Report looking at the funding of long term care.

As the population has continued to get steadily older, more and more people have become worried about losing their savings – and possibly their homes – because of the need to pay for long term care. It’s been widely acknowledged that a thorough review of the funding arrangements has been long overdue, with Andrew Dilnot, the economist who led the commission, calling the present regime “confusing, unfair and unsustainable.” So what are the main points of the Commission’s recommendations?

?A cap of £35,000 on an individual’s lifetime liability for care costs
?Food and accommodation costs are not capped – but liability is limited to £10,000 a year
?The threshold of savings and assets above which the state offers no help with care costs has been raised from £23,250 to £100,000
While the proposals have been broadly welcomed, there has also been criticism. Commentators have pointed out that with the already-projected rises in health spending (as the baby boomer generation ages) the Government simply doesn’t have the money to implement Dilnot’s recommendations – especially when the ever increasing bill for public sector pensions is taken into account.

In addition, the Government doesn’t have a particularly impressive track record of moving quickly where reforms like this are concerned. In 1997 Labour made reforming the funding of care a priority. Fourteen years later we finally have a report.

So where does this leave someone who wants to plan for long term care now – either for themselves, or perhaps for ageing parents? After all, even Andrew Dilnot does not expect implementation of his report before 2014.

The safe answer is almost certainly to make a start by talking to your usual adviser about long term care planning. They will be able to give you an idea of likely costs and suggestions on the best – and most tax efficient – ways in which to meet those costs. They will produce some concrete plans allowing you to start tackling the potential cost of long term care, but at the same time will make sure the plans are flexible enough to incorporate Dilnot’s recommendations when – and if – they are finally implemented.

Sources: Department of Health:
Daily Telegraph: