Ahead of the general election, all political parties must be clear on what plans they have for social care funding, according to Steven Cameron, pensions director at Aegon.
Speaking to FT Adviser, Cameron discussed why social care was an important aspect for advisers to be discussing with clients in light of consumer duty and the FCA’s vulnerability report.
He said: “Aegon has done research with NextWealth about the retirement advice space and two years ago when we did the survey and asked what drivers were increasing the demand for retirement advice, social care funding was one of the top three.”
Cameron attributed this to the fact that around the time the survey was completed, the government announced a new deal for social care funding.
“[At the time the government said] from October 2023, individuals who required care and to go into a care home would have to pay for the room and board and any upgrades they wanted. But the care costs themselves, meaning the care the local authority thought a person needed, would be capped at £86,000,” he added.
Cameron said when this deal was announced it “opened up a huge new market” for advisers in the retirement advice space.
“For the first time you could plan ahead. An adviser could say to their client there is a one in four chance that at some point they will need to go into a care home. Clients want to be in control of that and make sure they have enough money to ensure they get the level of care they want,” he explained.
Cameron said advisers could have conversations with their clients to find out whether they had enough regular income to cover room and board costs in a care home, the top up fees they would want for their care and whether they had enough to cover the £86,000 cap on costs.
“If a client did have enough money to cover all of that then they could be reassured the money they had built up in the hopes to pass on to family as inheritance in later life would be safe,” he added.
Unfortunately the social care deal has been pushed back until October 2025, but Cameron said Aegon were trying to keep social care funding on the political agenda and was calling for parties to be clear on where they stand with the subject.
He said: “If the Conservatives come into power will they honour the deal they created? In terms of Labour I would hope they would stick to some kind of deal.
"Labour may revisit some of the parameters of the original deal as there were debates in parliament about the fact the current one only worked for a certain demographic and not for the less wealthy.”
Cameron emphasised that integrating social care funding into a person's retirement plan would help advisers to adhere to consumer duty and avoid foreseeable harm.
