Adults aged 40 and over should pay a new tax to help fund the unsustainable costs of social care in the UK, two House of Commons select committees have said today.
A report from the cross-party MPs argues that the current system is "not fit to respond to future demographic trends", highlighting an urgent need to plug a £2.5bn funding gap.
A 'social care premium' would see individuals either pay additional national insurance, or have their money directly paid into a dedicated not-for-profit fund for adult care.
Contributions would start at the age of 40 to ensure intergenerational fairness, with wider reforms introduced at a later date to guarantee care is free at the point of delivery for all.
"The social care system is in a critical condition and there is an urgent need for more funding," Housing, Communities and local Government committee chair, Clive Betts, said.
"The government should now take the opportunity to build a political and public consensus for a social care premium to secure a fair and sustainable system in the long-term."
Under the proposals, individuals and employers would pay a new contribution into an "independent, dedicated and audited" fund to help gain public trust and acceptance for the measure.
The MPs said the personal element of care, such as help with washing, must eventually be delivered for free, but that accommodation should continue to be paid on a means-tested basis.
They also recommend that an independent body be tasked with providing the government with two-yearly forecasts on the funding requirements for future social care.
The Institute and Faculty of Actuaries (IFoA) responded by highlighting how those with assets between £20,000 and £40,000 lose 80p in means-tested benefits for every pound saved under the current system.
This is thought to disincentivising saving, with IFoA president-elect, Jules Constantinou, explaining how a "complex funding system" also makes it difficult for people to know how much to save.
"Today's report highlights the unfair impact that the current means test has on those with fewer assets," he continued. "Funding reform needs to be sustainable and communicated in a way the public can understand.
"We are pleased to see the recommendation to establish an independent body tasked with modelling and future forecasts.
"Actuaries are experts in this type of long-term analysis and well placed to be involved with this initiative."