Long-Term Care planning is vital

Wednesday, 28th October 2009 15:58 - by Resident IFA

To start off, a few figures from the National Office of Statistics, published on October 1st 2009. - Over the last 25 years the percentage of the population aged 65 and over has increased from 15 per cent in 1983 to 16 per cent in 2008, an increase of 1.5 million people. - The fastest population increase has been in the number of those aged 85 and over, the ‘oldest old’, with their numbers more than doubling since 1983, to reach 1.3 million in 2008. - By 2033 the number of people aged 85 and over is projected to more than double again to reach 3.2 million, and to account for 5 per cent of the total population. We do have an ageing population, of that there is no doubt. Take the Basic State Pension; already pretty much in a ‘push-pull’ situation where the National Insurance contributions of those of working age enter one end of the sausage machine, only to be paid out as State Pension to the retired at the other. I have not authored many Personal Finance Blog entries lately, due to studying for the Chartered Insurance Institute’s ‘Long-Term Care’ exam (CF8). I am pleased to say that I passed it, but it was a real eye-opener. The complexity of care arrangements, State Benefits, and regulatory bodies is confusing. Who pays for care – the NHS, Social Security, Local Authority, Primary Care Trust (PCT)...? What are the means-tested State benefits available? What amount of ‘means’ stops someone from being eligible to receive such benefits? What products do I opt for: Pre-funded Care Plan, Long-term Care Investment Bond, Immediate (Care) Needs Annuity, etc.? How are they taxed? This barely scratches the surface. Where am I going with this? Well, mainly a polite suggestion to consider your own situation and/or that of those around you. Trying to tackle the situation where you have an elderly relative entering care is potentially distressing at the best of times, without having to worry about how they are to fund their care. Professional advice is clearly a ‘must’ here; especially good if you can plan for care eventualities before they arise. Apart from seeking an Independent Financial Adviser (IFA) with the aforementioned qualification, you could do far worse than taking a look at the websites of Age Concern and the Care Quality Commission. The first two questions I would hypothetically ask are: 1. What is the required balance between estate preservation and maximising the State contribution to care? 2. Is there a valid Power of Attorney/Lasting Power of Attorney in place? The elderly person needing, or potentially needing, care should be actively involved in the planning process at all times (mental capacity allowing). Until next time...