The big question: The Dilnot Report

Do you feel the Dilnot Report has really tackled the issues in the long-term care market?

Claire Barker is head of the Equity Release Solicitors Alliance (ERSA)

A cap on contributions required from the individuals would limit the exposure of product providers, potentially resulting in a raft of new products.

These will give people a range of more attractive options to fund care.

The report also mentions equity release as a possible source of care funding, showing a further step towards the industry receiving official endorsement.

Our research into care funding revealed 32% of people would be more likely to take out equity release if it had a government stamp of approval a compelling figure for the government to note as it plans its response.

Clive Bolton is at-retirement director of Aviva

We found the recommendations made in the Dilnot Report could help to clarify the way in which the responsibility of paying for care might be shared between the government, individuals and their families.

This will enable them to plan for their retirement needs and alleviate some of the worries  they may have about funding this period.

Many people only start thinking about their care needs when, and as, they arise.

This report will be beneficial in bringing such issues to the forefront.

Adrian Boulding is pensions strategy director at Legal & General

So what can the savings and insurance sector offer in response to the proposals that individuals bear the first £35,000 of care costs and that the state will pick up the tab thereafter?

At first sight this could be about helping people plan, but that might be naïve, for two reasons.

Wealthy pensioners don’t need a separate plan to garner a spend of £35,000 spread over several years. They pay it from income.

I think the real opportunity is to help people to save for top-up care over and above state provision.

With the state providing for basic nursing home costs for everyone, I see demand for plans that will top that up to something more palatable.

If the government are prepared to send the nursing home of my choice the standard state fee, I’ll be prepared to spend over and above that to get the facilities I want.

Peter Carter is product marketing director at MetLife

The recommendation of a £35,000 cap on contributions to care costs with the state picking up the ‘tail risk’ is a sensible way of proceeding.

However, there should be greater flexibility on enabling people to use pension funds to pay for care.

It is wrong and inefficient that people die with assets in their pension funds which could have been used to pay for care.

There is also a risk  people could ‘play’ the system as behaviours may change if the recommendations are implemented. That needs to be looked at now.

Andrew Gadd is head of research at the Lighthouse Group

In truth, it would take the wisdom of Solomon to truly tackle the issues in the long-term care market but I think that the Dilnot Report is  a positive step forward.

I am broadly in agreement with the view expressed by the ABI and others that if implemented the Dilnot Report is an opportunity for insurers to launch various ‘new’ products in this area.

As the liability is capped there is the opportunity to launch relatively straightforward, as well as more complicated, products and I look forward to seeing what the insurance industry comes up with.

Russell Hall is a chartered financial planner at Almary Green

Advisers in the care fees planning space will find it difficult to give clear advice to clients who face paying care costs today for the following reasons:

A white paper is not expected until Spring 2012 and any reforms may not be implemented until 2014.

This leaves individuals requiring care now in a ‘black hole’.

The Report recommends a cap of £35,000 on an individual’s social care costs.

However, people will be required to contribute a national standard amount towards their living costs which has been estimated as £10,000 per annum.

Therefore, it is wrong to assume an individual’s lifetime contribution is capped at £35,000.

If the ‘hotel bill’ is set at £10,000 per annum, people will gravitate towards the luxury end of the care home sector, with the state picking up the tab for the balance cost a situation which is clearly untenable.