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Triple lock increase for April 2027 is 3.9% (probably)
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a very simplified care scheme could be an additional centrally funded layer on top of current council funded care for example. Might be less expensive and leverage existing local provision.
if its main job is to avoid the (IMO) overreach councils seem to have to take all your savings down to the barest essentials it can be a good thing. They have more powers than HMRC I sometimes think.
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The ratchet effect of the triple lock has been to increase state pension by 14% overall relative to earnings which isn't unexpected given the formula. Many people will argue that is has been sensible to bring up low income pensioners' incomes to above poverty levels. But of cause above earnings increases can't go on indefinitely.
There is still a ratchet effect going on with a double lock that increases at CPI or 2.5% each year, but that ratchet is to increase the state pension by more than CPI (when CPI is below 2.5%). From 2011 to 2027 that ratchet would have had the affect of not just bringing CPI increases up to earnings increases but above earnings increases. That would have meant overall the state pension would have increased relative to earnings by 5% as mentioned earlier.
Over the whole period 2011 to 2017 earnings have increased relative to prices by only about 0.22% per annum which is historically very low. Perhaps 1.5% - 2% is a typical long term assumption for long term growth of earnings over prices. So the ratchet didn't need to do much lifting to push the increases above earnings from 2011 to 2027. Also 2011 to 2027 arguably includes an abnormal number of years where CPI has been below 2.5% (it's the variation in CPI that pushes it below 2.5% in some year that is important for the new ratchet not really the absolute level of CPI).
So if the new proposed double lock had applied from 2011-2027 (with the long term earnings commitment applying for the period from 2011) it would be the higher of CPI and 2.5% that would be determining the increases in the immediate future rather than the earnings underpin.
However in practice I am assuming (without doing any real analysis) that over the long term that earnings growth assessed from 2030 will outpace the maximum of CPI and 2.5% (unlike the 2011 - 2027 period). That would mean we would be back to a situation over time where state pension was just increasing with earnings each year. Of course that causes political difficulties in years where earnings are either negative or less than CPI, 'why has my state pension gone down?', 'I can't afford things as my state pension has gone up less than prices?'. But for the starting year (possibly starting years) at least that problem doesn't arise. And (depending on the precise mechanics) the first double lock increase say in 2030 will still be in line with the existing triple lock (because the cumulative earnings increase will be for a period of 1 year) it's just that if the first increase is with CPI or 2.5% the excess over earnings will be clawed back at a later date.
So overall the double lock is a very sensible proposal in my view.
I came, I saw, I melted0 -
(Quoted pos removed by Forum Team)
by ‘highest’ you mean ‘anyone with savings more than 16k’ which isn’t a fortune (no its not poor either). They also take your income down to a bare minimum that the council decides is enough to live off - so you can’t even decide to live a ‘nice’ level or even a moderate level - its barely above state pension income before they go ‘no thats enough, we’ll take the rest thanks’.
I swear the council has more power to take your money in old age than HMRC does. Never mind gifts from excess income or the 7 year rule - HMRC might be ok but the council will come for you.
I agree if you can safely afford it, you should contribute. I don’t know how they draw that line though - the current one feels too harsh. He did say you’ll never need to pay out of your state pension which is a pretty low bar and about what the council already uses as an income threshold. So it may not be much different from what they currently have - but having national oversight or top up rather than just leaving it to councils?
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Councils dont take all your savings. The council paying for your care is a means tested benefit. If the rules say you have the means to pay for your care then you don’t get it. What you then do about the situation is up to you or those with the responsibility of acting on your behalf. Same as all other means tested benefits.
If people want something better, then there needs to be some form of state provision. It does seem unreasonable to me that this responsibility is currently being placed on local councils. Whether the number of people who actually need long term care justifies the full overhead of an NHS equivalent may be open to question. Perhaps simply having the government paying for a higher wealth limit could be a simpler approach, as you suggest.
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there is a practical gap between those two things.
council care is available and easily accessible (at least was for us). Much more approachable than going straight to private care. And when my mums savings started going over the threshold we were asked to start paying partly towards the care - fine. Although complicated by the fact my mums savings went over the threshold because we weren’t able to actually spend it because we couldn’t get PoA (she wasn’t capable of signing it but also wasn’t formally diagnosed until this bloody year) so my dad has been covering living costs since then. In theory only her income should be counted but also they restrict what can be spent. They have a lot of hoops before they’re satisfied.
I’m very grateful for their support but there are too many times that process gets in the way. Perhaps our bigger issue is lack of support getting a diagnosis to aid PoA more than the actual costs and its exacerbated the issue. But my parents aren’t rich by any stretch
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The council's have a legal responsibility to collect the funding, but the reality is they are intermediaries for large, multinational private equity groups who own most care homes and are caning the elderly.
According to this analysis there are 9500 care homes in the UK - fewer than 600 are publicly owned.
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Just to clarify the gist of the rules in relation to care home costs as people often get mixed up with the means tested benefit rules which have different limits and where capital doesn't include your house you live in.
If you have capital above £23,250 (and that includes the value of your house you were living in unless you've got say a partner still living there) you must pay the full cost of your care home fees out of your income and if that isn't enough (which it usually isn't of course) out of your savings and capital. You may get a small element of help £216.68 per week (NHS funded nursing care) if you require medical help from an NHS nurse. But NHS funded nursing care does not act as extra disposable income it usually offsets the higher fees charged by nursing homes for providing medical care. And you will probably get £114.60 per week in attendance allowance (assuming you qualify for higher rate). If you have really significant medical needs (NHS Continuing Healthcare) you get all your care cost paid for. In practice it's nigh on impossible to get this. So usually you are left paying most of your care home costs. Care home cost can typically be in the range £1,200 - £1,600 per week depending on where you live in England.
If your capital is below £14,250 your capital is disregarded and your income is used to pay for the first part of your care costs and the local authority pays the rest.
Between £14,250 and £23,250 there is a taper that applies until your capital falls to £14,250
I came, I saw, I melted4 -
I think like most people, the main issue is having to watch your life savings (or prospective inheritance) being spent on an exorbitant price of a care home. Surely there could be a limit on these care homes about how much they can charge ? I do seem to recall the Conservatives talking about raining the amount of savings you can keep to £80,000 ?
It does also make you question about 'do i save or spend my pension pot ' !0 -
As a general point, I think it is worth noting that not all of a councils care costs, will be spent on older people.
Nearly 40% is spent on Children's services.
Younger/middle age severely disabled adults, also tend to be very costly in care terms. So although the numerical % maybe low, the financial % will be higher. They rarely will have the funds to pay for themselves.
So could be the cost of care for older people may only be about 50% of a council's care budget, although of course many older people are paying for themselves, which is the topic of the moment.
To round off the stats, the total average care costs for councils as a % of their total budget is 72%.
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It's always helpful to have discussions informed by data - thank you.
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