Public ‘poorly informed’ over retirement costs

13 Dec 17

Just 5% of people are financially prepared for possible care costs in later life, a Demos report has revealed today.

The think-tank called on the government to set up a retirement ‘co-payment system’, as it released its research supported by Legal and General and based on existing figures and a survey of more than 2,000 people.

The survey found an “alarming lack of public awareness about the costs of social care”, with around a quarter believing care to be fully funded by the state and 16% unsure who picks up the bill.

It also found that 41% of people said they were saving up to cover the costs of care in later life, and 56% were saving for retirement.

Demos said based on current pension provision, on average a person will be paid around £2,500 a year in retirement. By comparison, residential care costs are around £30,000 a year.

The think-tank urged the government to set up a ‘co-payment system’ model to share shares costs between the individual and state and “enable individuals to better prepare and contribute to their portion of the costs”.

In addition, it said people should be helped to prepare for their care costs including insurance and equity release, and that the government should work with the financial services sector to develop the necessary products.

It said these measures should be included in the forthcoming care green paper, expected next summer.

Demos director Claudia Wood said: “The government cannot allow the public to remain poorly informed and complacent about their need for care when they get older, how much it will cost, and how much they will need to pay.

“Developing an awareness raising strategy – including around the financial products people will inevitably have to use to pay for care in later life – is just as important as deciding on a new care funding model itself.

“Without the former the latter will be doomed to fail.”

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