The Dilnot Report has recommended a lifetime cap on care fees paid by individuals of between £25,000 and £50,000, and a separate cap of between £7,000 and £10,000 on accommodation and food fees.
The independent review has also proposed a £100,000 asset threshold, under which individuals will not have to pay for their care.
SHIP director general Andrea Rozario (pictured) welcomed the findings, saying the government cannot ignore the report in the face of a looming crisis in how to fund care for the elderly.
She said: “We agree that a balance needs to be found on the sharing of responsibility for funding social care which allows people to contribute without penalising them for saving. The Report’s recommendation that care cost should never exceed 30% of a person’s assets achieves this balance.
“But the government needs to ensure that people are fully aware of what their options are and that they do not have to leave their homes to contribute to their care funding.”
Rozario said that options, such as equity release, have a “strong role to play” in helping older people contribute to the cost of care and added it will take the collaborative effort of all stakeholders to raise awareness about saving for retirement.
Vanessa Owen, head of equity release at LV=, said the proposals provide people with certainty that they will not be penalised for saving for retirement.
She said: “We particularly welcome the Report’s recognition that people should have the choice how they fund their contribution, recognising that some might raise cash from the value of their home whilst some might use savings or take out a new financial product.”
Owen added: “Be it to help fund care, or as an addition to pension income, equity release will need to become a more prominent factor in helping people fund retirement.”
The cap on how much people must pay towards their care also makes sense, Peter Lucas, chief executive of Newlife, said.
“It will not be universally popular but, if implemented, the introduction of a cap of £35,000 will mean people still take responsibility for a proportion of their care costs before the state steps in, but they are not penalised for building up assets for retirement as they are now.
“Equity release will be a solution for many people, as it allows them to meet the cost of care without draining their savings and pensions,” he said.
Claire Barker, chairman of the Equity Release Solicitors’ Alliance (ERSA), added: “Moving the means-tested threshold – above which people are eligible for their full care costs – from £23,250 to £100,000 – means people know they won’t lose nearly everything. And capping the amount people have to pay towards residential care at £35,000 is a more transparent system that people can plan for and won’t penalise them for building up assets over their lifetime.
“Equity release is a flexible solution that can help people meet these costs. The money can be used for whatever people want – including the cost of long term care – but it also means people can stay in their homes for longer.”
