Social care

Facilitating Increases in Long-Term Care Funding

This report examines long-term care funding from the perspective of low earners. It considers the appropriateness of a variety of options for accumulating low earners and decumulating low earners, stressing the need for immediate corrective action alongside a long-term national funding settlement.

Recommendations

  • Extra resources for care will need to come directly from individuals paying for their own care and indirectly from individuals as taxpayers or national/social insurance contributors
  • A mixed market of state-sponsored and private funding mechanisms that co-exist and complement each other could best meet individual need, resources, attitudes to risk and inclination to plan – Equity release is particularly relevant for the current older generation, including decumulating low earners who are often asset-rich but income-poor
  • Pre-funded long-term care insurance pools risks across society and therefore has associated welfare benefits
  • Tax incentives and soft-compulsion could help encourage saving specifically for long-term care among younger generations
  • It is clear that different vehicles will be needed for different generations – a mix of products for the current, largely asset-rich, older population and products for younger cohorts, who have more time to plan but may not have the housing wealth of previous generations
  • Overall, a central problem in take-up of products is a lack of awareness of the need to plan or pay for care. Demand needs to be stimulated through awareness-raising and availability of guidance and advice. We argue that action designed to improve supply of, and demand for, appropriate products should be entered into without delay.

Further reading

Who cares?
The experience of social care workers, and the enforcement of employment rights in the sector
·
Nye Cominetti
To govern is to choose
The choices facing the Chancellor this autumn
·
Torsten Bell, Adam Corlett, Daniel Tomlinson
A caring tax rise?
The impacts of a potential increase in National Insurance
·
Torsten Bell, Adam Corlett