National Insurance 'will not be increased' says Kwarteng
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Pension plans, no matter how well they’re funded, may be hit by unexpected care costs in a person’s later years. In recent months, Boris Johnson has signalled he’ll take action against the “injustice” of funding social care through property sales but recent research highlighted retirees may not be completely opposed to this reality.
According to new research from retirement specialist Just Group, “pragmatic” property owners are realistic about the possibility of needing to use some of the value in their homes to pay for potential care costs.
This, Just Group explained, questions the Government’s aims to protect the value of the home for future generations.
Boris Johnson detailed recently it was his job to protect people “from the fear of having to sell your home to pay for the costs of care”.
In a bid to remedy this issue, reports and rumours have emerged the Government is planning to hike National Insurance by one percent to provide further funding for health and social care, with the plans criticised by many for placing a financial burden disproportionately on younger and lower-paid workers.
Despite this, research from Just Group released today shows there may not be a need for such drastic measures.
In examining ONS data, Just Group detailed property wealth is concentrated among the over 65s, with this age group holding 41 percent – or £2.1trillion – of all housing value.
However, nearly half (47 percent) of homeowners aged 45+ accept the principle that some of the property value of a £500,000 home should be used to pay for care if someone has no other assets.
A further nine percent thought the whole value should be used, which compares to 44 percent who thought the value of the home should be protected from care costs.
That’s according to research carried out for Just Group’s Care Report 2021, the ninth in a series dating back to 2012.
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Stephen Lowe, the group communications director at Just Group, commented: “The government has promised care funding reforms but finding the cash seems to be a sticking point.
“A big question is whether the value in a home should be protected for inheritance if it increases inequality and means taxpayers who may not be so wealthy picking up the bill.
“In our research, the biggest group felt it was fair to use some proportion of the value of the home and two-thirds of these people thought that up to 50 percent was fair.
“The caveat is that in recent years we have seen rising numbers wanting to protect the value of the house.
“People are already primed to use their property too – our research found more than four in 10 homeowners aged 45+ expected to sell their property if they needed to pay for residential care.”
Just Group’s care report also compared the average house price in each region against the average cost of care and shows wide regional disparities in the number of years care property values could cover, with London homeowners able to fund 12 years of residential care compared to an average of just under four years in the North East.
The England average is over 7.5 years.
Mr Lowe concluded on what needs to happen going forward: “Part of the necessary political debate around social care reform will be to come clean about the role of property rather than treating it as a taboo.
“Ignoring the issue only encourages the population to do likewise.
“We need a clear and honest dialogue so that people can confidently make the plans they need for later life.”
For many, these dialogues will be needed sooner rather than later as council care leaders recently warned around 250,000 vulnerable people in England are struggling on social care waiting lists for up to six months.
Around 75,000 are also waiting for an initial assessment for their care needs and an estimated 159,000 people already getting care are facing long delays for their annual reviews.
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