Equity release firms respond to Dilnot Report
Andrew Dilnot’s has submitted an independent report to the government on reforming the system for elderly care in England.
The report stipulates that individuals should have to pay no more than the first £35,000 of their care costs, and those whose assets are worth less than £100,000 should pay less.
Commenting on these findings, AXA Wealth’s head of pensions development, Mike Morrison, said: “The report highlights the need for the industry to develop innovative product solutions that will provide for people into later life which can only happen if the financial services industry and government work together.
“Products such as equity release go some way to address the funding issue. However, with increasing longevity, consumers need a range of flexible products to suit their needs and allow their money to continue growing, but with a guarantee.
“We need to find a way to encourage people to build up a fund which is ring fenced exclusively for long term care. With this in mind, I believe that in addition to the annual pension contribution allowance of £50,000 a further £10,000 should be permitted to solely fund long term care which would be tax efficient. These savings can serve as a supplement to the £35,000 cap suggested in the Dilnot Commission Report.”
Meanwhile, Clive Bolton, retirement director at Aviva, said: “Long-term care has long been a significant concern to retirees in the UK.
“We believe these recommendations could bring greater clarity to help consumers plan for their own retirement needs and expenditure, and give them financial peace of mind at retirement. Many people only start thinking about their long-term care needs when and as they arise.
“As such, this report will be beneficial in opening up the debate and bringing such issues to the forefront.
“Our recent research revealed that already 43% of retirees plan on using equity from their homes in order to pay for their long-term care.
“With a clear cap on potential costs, the proposals may help many people to stay independent in their homes with long-term care support with a clear idea of what they will have to pay, and how.
“We would urge the government to take forward these recommendations.”