Posted by: WealthIFA | July 13, 2012

Financial News Update we 13/07/2012

Hope you have had a good week?

As you may know, it was the WKCCI golf day this week – a pleasant reprieve from the office for a day – and one where I was able to enjoy a few (and I do mean a few) moments of impressive golf although, truth be told, there were more shocking moments than anything else!

The weather was kinder to some than others – our group just managed to finish before the heavens really opened and the place was awash with large hail stones but others were not so lucky with some forced to abandon their games as putting through puddles/ice rocks just isn’t the fun it used to be….

As an eternal optimist, this convinced me our group had a better chance of success as the odds were less stacked against us… but it wasn’t to be and the usual suspects walked away with 1st place – well done to Tony, Malcolm et al… maybe next year?

Talking of storms, this week’s news has been dominated by the social care reforms.

On Wednesday the white paper was published on long term care funding and, having waited for over a year (since the Dilnot report was published), it was a highly anticipated publication… oh dear.

To be fair, it was never going to be easy trying to accommodate Dilnots proposals (at a reported cost of £1.7bn) during such times of austerity but the term “radical reform” seems to be nothing more than propaganda?

Despite the recommended cap of £35,000-£50,000 for care fees and an increase of the means test threshold to £100,000, although they agreed with the principles of the report recognizing it as “the right basis for any new funding model”, the government have delayed any such consideration, let alone implementation, until the next comprehensive spending review scheduled for 2014 or 2015?

It is suggested the cap for care fees will be up to £100,000 – between 2 or 3 times the recommended levels – and their “new” proposal is for a deferred payment scheme which will allow people to borrow from the government to fund care costs to ensure they will not have to sell their homes… well, whilst they are alive that is.

Not sure if I have missed something here but does the deferred payment scheme not exist already? And the existing one doesn’t charge any interest (not even a “nominal” one).

Furthermore, it can’t be an “open cheque” can it? Surely there will be a buffer in place to protect public funds from depreciating property prices? Will the caveat be that the loan is only available up to say, 60% of the property’s value? What then? Will you be expected to sell anyway and therefore use the remaining proceeds until they reach any new threshold (which is likely not to be anywhere near the £100,000 proposed by Dilnot)?

If this is the case there is likely not to be enough left to make any further provision and this will mean going back to the local authority to rely on them to fund any future care costs.

The one thing the government has ensured by delaying consideration of these reforms is that many more people will still sell their homes to fund care costs – something Mr Blair said he wanted to end back in 1997.

With the majority of those same self funders not seeking proper advice on how best to pay those care fees, many more will most likely deplete their assets and then turn to the state to cover their care costs.

The cost of this very situation (self funders running out of money and turning to the state for care costs) is reported to already be in the region of £1bn per annum, so I hope I am mistaken.

Don’t worry though, the government has said that it is “essential” to reach a decision in the next spending review… now, where have we heard that before?!

Well, not much else in the news so that’s all for now – I hope you have a great weekend!

This Week …

Long Term Care

Parties at war over funding of care for the elderly:
There’s no long-term vision in Dilnot’s dismissal
Pay when you die solution for pensioners moving into care homes
Lansley proposals do little to answer long-term care funding question


Please Note: The purpose of these updates is to report article content that may be of interest to you and/or your clients. Any information should not be construed as specific financial advice. Therefore, before any financial decision is made or plans are implemented, independent financial advice should be sought.


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