Retirement savers want the government to put confusion over the costs of long term care to bed so they can make firm plans to finance their futures.
They want a clear statement showing what the government is likely to pay towards their care so they set aside funds to ease their later retirement.
The message comes from a study by the Commission on Funding of Care and Support as part of a review commissioned by the government.
Care concerns
The main worry for savers was successive governments ‘shifting goalposts’ by changing policies, and that any final decision should be financially sustainable.
Andrew Dilnot, chairing the commission, said: “This research demonstrates exactly why reform of funding for care and support is needed. Too many people are not able to plan for the kind of care and support they would want because of confusion over how the current system works. Certainly, the system we have at the moment isn’t one to be proud of and it won’t be able to cope with future demands
“But people weren’t downcast about the future, they were enthusiastic about finding a workable solution to the funding challenge. Most people are happy to contribute towards the cost of their long-term care, but they want a simpler system which gives them greater certainty over what the state will provide and what their responsibilities will be.
“We’re hearing that people accept that there are no easy answers: what’s most important is that we come up with a lasting settlement.”
Other concerns raised in the study include:
• A lack of understanding of what long term care provides and how the system is funded
• A move away from the assumption that families will provide long term care for relatives
• Worries about a government-funded safety net for the poorest pensioners and those needing more care
• The savings threshold for free long term care is too low at £23,250
• Retirement savers would like funding options covering insurance and pensions
The research will underpin a report from the commission to the government in July 2011.
Looking at long term care
Long term care aims to give independence to people with a wide range of age and health related problems by offering support with day-to-day domestic tasks.
This care is not state-funded, although means-tested benefits are available for specific support provided by local councils.
Many with assets worth more than £23,250 are excluded from cash help from benefits and must fund their own care.
Government urged to improve care
Another study in to long-term care funding by international financial policy makers the Organisation of Economic Co-operation and Development (OECD) is urging governments to redouble efforts to make long term care policies affordable and to provide more robust support to individuals.
The UK is a key member of the OECD.
A new report Help Wanted? Providing and paying for long-term care says around half of everyone benefitting from long term care is aged at least 80, and the proportion of the population in this age band is likely to increase from one in 25 of the population now to 10% by 2050.
The report predicts governments will have to double or triple spending to meet demand for services – and with average spending on long term care across OECD countries standing at 1.5% of GDP, this means a significant share of a country’s wealth will be diverted in to providing social care.
A fast ageing world – % of population over 80 years old
Source: OECD Labour Force and Demographic database
“With costs rising fast, countries must get better value for money from their spending on long-term care,” said OECD Secretary-General Angel Gurría. “The piecemeal policies in place in many countries must be overhauled in order to boost productivity and support family carers who are the backbone of long-term care systems.”
Upgrading the image of care workers
The OECD has identified how care workers are held in low regard by many communities and is encouraging governments to put programs in place to upgrade care careers.
Many care workers take a job for a short time and accept low pay until a better post comes along. Better pay and conditions would boost the image of the role, while giving workers a chance to build a career rather than take a stop-gap role.
This would give a knock-on effect to long term care, as care givers would have more experience and better training that would aid them in providing a better service. In turn, this better service would benefit those receiving care.
The stigma of working in the sector plus low, mainly part-time pay tends to put off many capable would-be carers, leaving the posts open for migrants. In the UK, one in four care workers comes from overseas.
One solution is offering language and skills training to raise the profile of these migrant workers.
Long term care affordability
In line with the Commission on Funding of Care and Support study results, the OECD also wants governments to offer quality care at an affordable price.
The OECD notes that respite care and state funding can take the stress away from institutional funding to let more people in long term care at home. The OECD report reckons 70% of care receivers can remain in their own homes if support is properly configured.
The report writers also note that in the US and France, the largest long term care markets in the OECD, costs are expensive and are only affordable by those with above-average incomes.
Private insurance take up is low for the over 40s, despite established markets – with only 5% of the age group in France investing in cover.
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