People could be forced to stump up as much as £20,000 when they retire in order to help fund the social care and support system in the UK.
The state currently only provides free social care to people on low incomes, with anyone with assets (such as property or savings) of £23,500 or more expected to fund their own care.
However, new plans to reform the system, put forward in a White Paper published today (14 July), suggest that the current means-tested system should be scrapped with “affordable” care provided to everyone.
The government has suggested three ways that the current system could be reformed. The first option is for the state to provide a certain level of care - for example, a quarter or a third - to everyone, with most individuals expected to pay the rest out of their own pockets.
The second is the introduction of insurance that would cover this additional cost – people could pay in instalments or as a lump sum, or this cost could even be deferred until after death. The government estimates this would cost people around £20,000 to £25,000, compared with the current average cost of care of £30,000.
Finally, the government might require people to pay up to £20,000 on their retirement in return for free social care. This would still be means-tested; people on low incomes would be exempt from making this payment, and the size of people’s contribution would be set according to their savings and other assets.
The government says care in the UK needs to be affordable, but points out that this doesn’t mean free. Its research shows that more than half of people think that care will be free, whereas in reality this cost can be very high. A 65-year-old can expect to need care costing on average £30,000 during retirement, for example.
Accidents, long-term illness, disability and the effects of growing older are among the main reasons why people might need to depend on the care system. Two in three women and one in two men will develop high-care needs during their retirement, according to the government.
It is likely to take around five year before these proposals are turned into legislation.
A system whereby everybody would be responsible for paying for their own basic care and support when they needed it has already been ruled out, as have higher taxes.
The proposals have caused outrage among pensioner groups. “Care in the UK is in crisis,” say Dot Gibson, general secretary of the National Pensioners Convention. “Suggestions that people should pay lump sums or take out private health insurance just won’t tackle the inequalities in the system.”
However, Stephen Haddrill, director general of the Association of British Insurers, says: "Care homes are expensive, with most elderly people paying for care from their life savings or having to sell their own home.
"The current funding situation is not sustainable, and given that the government has made clear that no extra money is available, the private sector has an essential part to play in meeting the growing need for care.”