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News - 14 May 2014

Report says that few will hit social care cost cap

According to analysis from the Institute and Faculty of Actuaries (IFoA), Pensioners expecting a government cap on the cost of elderly social care in England to mean help paying their bill are "in for a shock".

The £72,000 limit, due to start in 2016, will benefit just 8% of men and 15% of women.

Lavinia Newman, founder of ABDS comments:
“Before the establishment of the cap, anyone with assets of more than £23,250 would be expected to fund all of their care, whether in their own house or at a residential home. This led to elderly people routinely being forced to sell their property to pay for their care and led to the setting up of the Dilnot Commission by the coalition government in 2010.”

The Dilnot Commission issued its report in 2011 and recommended a cap on the lifetime cost of social care to an individual of between £25,000 and £50,000 with the government picking up the bill above the capped level.

The final level of the cap - £72,000 - was announced by Chancellor George Osborne in 2013.
He also said that the capital limit for means-tested care costs would be set at £118,000, which it was hoped would allow more people to keep their homes.

The IFoA, which is an independent professional body, warned that many people's pension savings were not enough to cover the cost of elderly care, with the cap not covering accommodation and living expenses - but rather the amount a local authority pays for care - an elderly person could have spent £140,000 before qualifying.

The IFoA have called on ministers to introduce tax breaks so that people would be encouraged to save money to pay for their future care, and recommend setting up a specialist Pension Care Fund, which would be subject to the same tax rules as pensions, but used to pay for the cost of a spouse or relative's care.

If you need any help and advice on Care Homes and Nursing Homes, contact Peter Ham, Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net

Brilliant with numbers   
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Clear and precise with advice
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In touch with issues that face our clients
Mindful of our client’s long term strategic goals

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