Use your pension to insure against long-term care costs, say ministers

http://www.guardian.co.uk/uk/2013/jan/09/pensions-insure-long-term-care

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Ministers, along with the finance industry, are considering urging people to use their pensions to buy insurance cover against long-term care costs. The proposal is within plans, to be published soon, on how the UK will deal with a growing crisis in the sector.

The insurance plan is designed to help individuals pay their share of care costs up to a cap due to be announced by government in the coming weeks.

Such insurance products could help ministers sell their scheme in the face of the outcry expected when they set a higher cap – after which the state will guarantee to pay costs – than that recommended by their adviser, Andrew Dilnot.

Recent reports suggested the coalition was considering a cap up to £70,000 per person, which is double the amount that was recommended by Dilnot.

Ministers will also have to accept or alter the recommendation that only people with assets exceeding £100,000 would pay anything towards care in later years.

"If you have done Dilnot and the total costs have been capped, insurance becomes possible," Steve Webb, the pensions minister, told a Lords committee inquiry on aging and long-term social care.

Webb also said that more people could be encouraged to downsize in property to help pay care costs.

"A lot more could be done on trading down, but I realise this is sensitive," said Webb, who acknowledged that government would have to take account of issues such as the lack of smaller homes in rural areas, which would force elderly people to leave their communities.

The Tory party chairman, Grant Shapps, while housing minister praised local councils running rental schemes to accommodate elderly people moving to smaller homes to avoid selling up.

As another way of helping elderly people claim a better income, the government was also working on schemes to encourage and help those wanting to work beyond the usual retirement age, said Webb.

The minister said that job centres assisted cv preparation and other skills for older clients, and that ministers were considering how the work programme could be changed to improve incentives to find jobs for older applicants.

At the same committee, the health secretary, Jeremy Hunt, gave more details about his plans for Ofsted-style inspections of NHS organisations and care homes, which could include assessments of the "culture" in the field. There could be a link to public comments and ratings in the style of the popular travel website TripAdvisor. In November Hunt ordered a review of the proposal.

Hunt also revealed that the NHS had passed the half-way mark in the "Nicholson challenge" (mandates set by the NHS chief executive Sir David Nicholson for efficiency savings in the health service), for making £20bn of "efficiency savings" by 2015; it was due to reach £11bn by the end of March.

In December, however, the National Audit Office challenged ministers' previous claims that they had found nearly £6bn of the productivity savings, suggesting the real figure was smaller.