The last taboo

Care at the end of life is in crisis, warns editor Stephanie Hawthorne

Death is a taboo subject – persuading people to read articles on the end of life or will planning is nigh on impossible. So if you read on, give yourself a medal for valour! Dementia because of old age is also something people do not want to think about, or plan for, but it could happen to any one of us – if not tomorrow, then in five, ten, 20 or 30 years’ time. It is more of a scourge than cancer, particularly for the victim’s loved ones, for it is a terminal illness from which there is no recovery, no cure and minimal effective treatment.

If you have cancer, in all probability you will have all your treatment paid for in the NHS, but people with dementia will mostly need social care, which is provided by the local authority and is severely means tested – people with savings of more than £23,250 in England will have to pay for every minute of care. This is discriminatory. Wiping someone’s bottom is just as vital for life sometimes as a nurse giving out the medicines on the wards. The arbitrary division between social care and health care is a nonsense.

Virtually no one is saving anything for long-term care, neither the state nor the private individual, and the financial services industry has put it in the "too difficult" file.
Stephanie Hawthorne

Around half the population over the age of 65 will need to spend at least £20,000 on later life care, and one in ten will spend over £100,000.

Funding care out of local authority funds as at present is a mistake – council tax is highly regressive and bears no relation to people’s ability to pay. It is also an unjust tax – pensioners in the East End of London may have an income of little more than £100 a week, even if their homes are now worth hundreds of thousands of pounds. In areas of the greatest need, there is often the lowest tax take.

Freedom and Choice

Virtually no one is saving anything for long-term care, neither the state nor the private individual, and the financial services industry has put it in the “too difficult, too unprofitable and of marginal interest” file. Indeed, Freedom and Choice reforms leave people less able to manage in later life. The old fashioned final salary schemes with inflation linked income simply demanded of their members a bank account. Now pensioners have to be stock market experts and will falter unless the annuity market becomes viable again. Dementia and Freedom and Choice are poor bedfellows.

Ros Altmann, a passionate social care campaigner, says: “The problem is worse for older women than for men: the Chartered Insurance Institute report on the risks in women’s lives found that this is a much worse problem for women. The median man over age 65 will need to spend around £37,000 on later life care, but the median woman will need around £70,000. Where will this money come from? It either has to come from councils on a draconian means-tested basis, or the NHS (when early intervention or prevention is not funded), or individuals and their families who suddenly find themselves faced with huge spending they had not prepared for. And, of course, older women are less able to save for their future needs because they are more likely to have to cut down or stop working to provide care for loved ones – society takes this free female caring for granted.”

Incentives for social care saving

Dr Altmann adds: “We spend around £40bn on incentives for pension saving and not a penny on incentives for social care saving. 21st century retirement needs more than a conventional pension to help fund later life. Providing taxpayer incentives and employer incentives is important. The cost to society of failing to ensure that money is set aside for future social care needs will put intolerable burdens on the NHS and on younger generations, as well as on older people.”

The problem is too big for lone individuals. A variety of things could be done, for example: care ISAs, workplace saving plans, eldercare vouchers, and family care saving plans free of inheritance tax.

Let us make 2017 the year when the most vulnerable and helpless in society (and their carers) get a new deal.

Stephanie Hawthorne has been editor of Pensions World since 1989. An honours law graduate of King's College, London and winner of 10 first and second prizes for pensions, property and insurance journalism, Stephanie has been a journalist for 25 years. Starting her financial career as a researcher/marketing specialist for a national independent financial adviser and subsequently a leading life office, she then moved on to Insurance Age, Planned Savings and Financial Times' Money Management (deputy editor). Stephanie has contributed articles to the Financial Times, Mail on Sunday, The Times, The Sunday Times, The Sunday Telegraph and The Observer, as well as numerous magazines. Among her other editorships are Counsel: The Journal of the Bar of England and Wales (from 1997 to 2007) and Charity World (managing editor, 1993 to 1997).