IFoA releases interactive online regional mapping tools for social care cost capping

• Interactive maps show expected costs for those entering care homes at 85 and likelihood of benefiting from the new care cap from 2016
• Maps highlight significant regional differences in costs and the time taken to reach care cap
• Maps will help people to plan how much savings they may need to help meet care costs base on where they live
• IFoA calls for consideration of how pensions could help meet care costs within new pension product frameworks

The Institute and Faculty of Actuaries (IFoA) has today released two online mapping tools for all English regions showing the differing care costs and the impact of the Government's recently introduced cap on the cost of social care. The maps show the results for care homes with nursing and without nursing: 

• Map of English regions that have care homes with nursing
• Map of English regions that have care homes without nursing 

The IFoA study shows that the majority of people entering care homes are unlikely to benefit from the cap and that costs which will fall on individuals across England (differing arrangements apply in Wales, Scotland and Northern Ireland) are likely to be significant. The IFoA has suggested that planned reforms to pensions could allow people to meet these costs from pension savings. 

The new social care cap of £72,000 has been designed by the Government to prevent people from facing ‘catastrophic care costs’. But there is some concern that individuals will not understand that the cap only covers the amount that the local authority would pay for care needs and excludes daily living costs.  Additional ‘top-up’ care costs are also not included within the cap.  The IFoA found that on average this meant people entering care homes at the age of 85 would spend £140,000 before reaching the care cap and just 8% of men in care homes (15% of women) were likely to reach the cap at all. 

Thomas Kenny, one of the authors of the IFoA’s report “How pensions can help meet consumer needs under the new social care regime” from which the data in the maps is taken, said:

“There are considerable regional differences within England in the time it will take to reach the care cap and the money spent before reaching it. The maps have been created to help people better understand the costs that they can expect if they need care and the savings provision that may be required. 

“The IFoA believes that pensions could be used effectively to help meet care costs. The Government is proposing significant changes in pensions and is strongly encouraging new thinking and product ideas for pensions. Care cost provision should be included within that thinking.”

The IFoA recommends a number of regulatory and tax changes that could help encourage greater use of pensions in funding long term care needs in retirement, such as:

• amending means testing rules to create a level playing field with other life assurance products; 
• confirming that annuities that have benefits linked to disability and social care needs can be treated as a pension annuity under new tax rules;
• allowing pensions to be paid directly to registered care homes/providers and not treated as income for pensioners.

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For the files to upload the two social care maps onto your website or for further information regarding the IFoA’s research on “How pensions can help meet consumer needs under the new social care regime” please contact Annette Heninger at the IFoA on 020 7632 2126 or annette.heninger@actuaries.org.uk

Editorial notes:

• There is a wide variation in local authority care costs across the country and this has a significant impact on the time taken to reach the cap and the costs incurred by the individual at that point. 
• The Care Act 2014 will replace existing legislation in England and introduce a new legal framework which will be phased in during 2015-2016 (therefore interactive maps apply to England only).  
• Different legislation applies to Scotland, Wales and Northern Ireland. 
• One of the key changes of the legislation is a new capped charging system on care costs.
• A cap, of £72,000, will apply to the care costs of people in England of State Pension Age and older and will be effective from April 2016. 
• There are three types of care cost: daily living costs; local authority set care costs; and top-up care costs.
• The cap only applies in relation to local authority set care costs.

About the Institute and Faculty of Actuaries

1. The Institute and Faculty of Actuaries (IFoA) is a royal chartered, not-for-profit, professional body. 
2. Research undertaken by the IFoA is not commercial. As a learned society, research helps us to fulfil two of our royal charter requirements; to further actuarial science and serve the public interest.  
3. Actuaries provide commercial, financial and prudential advice on the management of a business’s assets and liabilities, especially where long term management and planning are critical to the success of any business venture. They also advise individuals, and advise on social and public interest issues.
4. Members of the IFoA have a statutory role in the supervision of pension funds and life insurance companies. They also have a statutory role to provide actuarial opinions for managing agents at Lloyd’s.
5. Members are governed by the Institute and Faculty of Actuaries. A rigorous examination system is supported by a programme of continuing professional development and a professional code of conduct supports high standards reflecting the significant role of actuaries in society.
6. The IFoA is available to provide independent expert comment to the media on a range of actuarial- related issues, including enterprise risk management, finance and investment, general insurance, health and care, life assurance, mortality, and pensions.