Does Dilnot mean an end to care-funding uncertainty?

Sue Elliott, a leading health and care actuary and chair of the Actuarial Profession’s Health and Care committee said: “The good news is that the Commission has recommended a cap on the amount people will have to personally contribute to their care. If individuals have to pay no more than £35,000, no matter how long their care lasts, it will help them better prepare for their future. This greater certainty would also allow insurance companies to design more affordable and simpler products to help individuals with their financial planning.”

The UK over 65 population is expected to double by 2058 and while life expectancy continues to increase, healthy life expectancy is not keeping pace, meaning that the number of years a person can expect to live in poor health is increasing.

This problem is compounded by a change in demographics where the population is increasing faster at the older ages than at younger ages.  This change will have a significant effect on the age-dependency ratio (the number of people not in the labour force versus the number of people in the labour force). Currently this stands at 25% but by 2056 it is projected to stand at 45%, before taking into account the changes to state pension age.

One in four over 65 year olds can expect to have some kind of care and support  requirement in the future and the average cost of care can range from £25,000 per year for basic private provision to over £50,000 per year for high end offerings and specialised care.  The average length of stay in residential care is two years, but for self-funders the average increases to four years and for one in ten residents the length of stay is eight years.

Sue Elliott said: “In terms of what products will be designed to meet the costs of an individual’s care requirements and how much these might cost, it is too early to tell. It will depend on a multitude of factors including, of course, what the Government does with the recommendations. But if Dilnot’s proposed cap becomes law, then the uncertainty which many face as they attempt to plan for their future will be significantly reduced. As actuaries, we have the skills to create practical solutions to help individuals plan and to help manage the financial risks created by the demographic changes we expect in the future. So we look forward to working with Government on the details and the implementation of the proposals.”

ENDS

Enquiries: Tel. Michael Scanlan on 07798 804 871 or email michael.scanlan@actuaries.org.uk

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