Having to sell the home belonging to elderly parents or relatives to pay for the expenses involved in long-term care is a big worry for a great many families. However, under government proposals expected to be released next week, tens of thousands of such families could be saved this traumatic scenario each year. A Green Paper discussion document to be out in the next few days is to suggest a range of new measures that would let retirees hang on to their properties when they need care in a nursing home environment. Options mooted include a one-off payment to be made at retirement or death, or compulsory insurance paid right through a career.
Phil Hope, the government’s social care minister, says that this is a really important opportunity to completely reshape the UK care system. The government knows the system is complex, that it is deemed unfair, that you get different services in different ways in different parts of the country and that the funding is unfair, i.e. that someone who has worked hard all of their life and bought a house has to sell it if they need to go into a care home.
There is an answer; an immediate-needs annuity, sometimes called a care-fees annuity. You buy these when you actually require care. In exchange for payment of a lump sum, the annuity plan guarantees to meet all, or some, of your long-term care needs right through the rest of your life. The average cost of one of these plans is usually four or five times the cost of ongoing annual care, and the average fee is £80,000, according to Partnership Assurance, one of the leading companies involved in selling these annuities, alongside AXA PPP.
Janet Davies, from Symponia, a leading care fees specialist, suggests that the downside of these schemes is that the investment can be completely lost if you die soon after the pension annuity is set up. However, capital protection can be included as an option to cover situations where the elderly person might die shortly after the purchase.