Next stop: Progress

Sue Elliott looks at recent developments in long-term care and asks what happens now.

Retirement Planner’s survey into long-term care (May 2011) didn’t present a pretty picture. Almost half of advisers thought current ­products were ‘not fit for purpose’.

Other concerns included the maze of rules, too little access to specialist support and a refusal by many clients to face harsh reality.

One respondent called it ‘a ­difficult and emotional topic’ for clients but that could equally apply to how many politicians seem to view the issue as well. However, after many years of ­confusion and dissatisfaction, we could now be on the brink of a ­major breakthrough.

In July, the Dilnot Commission released its report with recommendations on how care is funded, with the government aiming to publish a White Paper by the end of the year.

Advisers need to watch these developments closely because they have the potential to ­unleash a ­torrent of new thinking and ­innovation into a moribund market.

The scale of the problem has become so huge that there is a real sense at the highest level that failure is not an option.

Here are some of the facts. Life expectancy is rising more quickly than healthy life expectancy so ­although we are living longer, a higher proportion of our lives will be spent in poor health.

One in four retirees will require some form of care at some point in their life. The aged dependency ratio of people over 65 compared to working age is forecast to increase from more than 30% in 2006 to nearly 50% by 2051.

Finally, the total cost of privately funded care in 2011 is expected to be about £7bn. Most of that needs to come from savings, sales of assets, such as houses, and from families.

Looking ahead

There is a new sense of interest among product providers who have been, to a large extent, discouraged by the uncertainties in the past. But in the coming years, advisers have the opportunity to be at the vanguard of a massive social change.

The Commission’s task was to consider a range of funding ideas, including both voluntary insurance and partnership schemes to cope with the costs of care and support.

It is clear more resources are needed to fund the growing need for care and these will need to be met from a combination of the public, ­private and voluntary sectors.

The ­commissioners also accepted that people should have the opportunity to protect themselves against open-ended future costs of care.