Industry welcomes clarity supplied by capped care costs in Dilnot report
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The Dilnot report on long-term care funding will provide consumers with the clarity they need to plan their retirement funding, say equity release providers.
Last week the Commission on Funding of Care and Support published its report Fairer Care Funding, which recommends putting a cap of £35,000 on individuals’ lifetime contributions to their social care costs.
It also says that the means-tested threshold above which individuals are required to fund the full cost of their care should be increased from its current level of £23,250 to £100,000, while individuals should contribute between £7,000 and £10,000 a year to their living costs if in residential care.
Andrea Rozario, director-general of Safe Home Income Plans, says: “The commission is trying to eliminate the uncertainty that consumers and funding providers face in predicting the total cost of care.
“Armed with the certainty that consumers’ contributions will be capped at a certain point, firms will be able to develop products and I think we will see more innovation from insurance and equity release providers.”
Simon Chalk, later life planner at Later Living, says the proposals will give people a target to save for.
He says: “This will result in more people considering equity release, although on the other hand the equity release sector will lose out on a certain amount of business from those who now qualify for state support.”
But Dean Mirfin, group director at Key Retirement Solutions, says business levels are unlikely to drop because equity release is used for a wide range of purposes, not just to fund long-term care.
He adds: “Many individuals will still incur significant costs for care under the Dilnot proposals as they will still need to pay for their food and accommodation if they go into a home.”
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