This weeks government announcement on social care costs should trigger a discussion on whether pension savings can be used to fund the cost of long-term care, according to the Institute and Faculty of Actuaries.
Plans to limit care costs in England were confirmed on Monday by Health Secretary Jeremy Hunt. They involve a £75,000 cap on an individual's lifetime social care costs, as well as making taxpayer funded support available to more people than is currently the case. The plans build on the recommendations made in 2011 by the Commission on Funding of Care and Support chaired by economist Andrew Dilnot.
David Hare, president elect of the Institute and Faculty of Actuaries, said the lifetime cap would provide 'welcome clarity'. He called, however, for a 'more holistic' approach to how long-term financial planning was approached.
'We believe that the best way to do this would be to consider how pensions and long term care requirements could be better linked,' he explained.
'With proposals in place for sweeping reforms in both these areas by the government, we believe that now is the right time to consider how it is possible for individuals saving for their later lives in a pension to utilise these savings for long term care should they ever need to.'
The Institute and Faculty of Actuaries is already carrying out research with its members to explore the potential for this, he noted.
He added: 'There are a number of challenges ahead, not least the infrastructure that is required to help individuals and families access the right financial and medical advice when considering long term care. These challenges need to be tackled by all of us and consideration of how best to use existing infrastructure for financial and health care advice is a necessary next step.'
Hare also called for further detail on how the cap on care costs would be reviewed on an on-going basis to enable the financial services industry to tailor its products so they can help people plan ahead for long-term care.