19/08/2015
In light of recent increases to costs of homecare, nearly 20,000 British pensioners have been forced to sign contracts which effectively give councils permission to take money from their property after death.
The deals, already being branded as ‘Pay when you die’ are particularly controversial considering the lack of funds likely to be inherited by surviving relatives. With the average time spent in a care home increasing due to medical and nutritional advances, money old folk are financially underprepared for such financial burdens in old age.
John Perks, managing director of insurer LV= retirement solutions, said: "The UK is facing an uncertain future on the funding of long-term care, especially with the care cap being delayed.
"Although many of us leave the workplace in good health, as we are living longer with the average retirement now 17 years long, the likelihood of us needing residential or domiciliary care is increasing. In addition, we are also seeing a rise in the length of time being spent in care.
"We would encourage those individuals in and approaching retirement, to seek financial advice as to how they can make the most of their pension pots and potentially meet these costs."
Under the deal, elderly people effectively allow their home to be remortgaged after death. A lifetime’s worth of savings and peace of mind regarding a financial contribution to the next generation can be wiped out within a few short years. With the average spending on care at £75,000 per person, the average pension pot has already been vastly exceeded.
According to LV= which conducted a survey, over 20% of adults said they had been forced to sell their property in order to raise the necessary care fees.
With the government delaying its promised cap on homecare until 2020, many over 65’s are feeling the financial pressure themselves as councils complained of a care sector too underfunded to be able to cope with the change of legislation.
As it stands, anyone with over £23,250 of assets receives no help from the state towards costs. Under the new rules, anyone with up to £118,000 will get some kind of subsidiary help.
In particular, women are most likely to be affected. Women require more than double the amount of care than men, whilst only 75% have anything other than a state pension to rely on, compared to 91% of men having a secondary form of income. The proposed changes in 2020 will not come soon enough for some.
Written By:
Daniel James
www.danieljamesbio.com
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