One of the biggest secrets of ageing is revealed: the Dilnot Report is published today.

One of the biggest secrets of ageing is revealed: the so-called ‘Dilnot Report’ (actual title: Fairer Care Funding) is published today (July 4th). This is the report and recommendations made to the UK Government by the Commission on Funding of Care and Support, a body chaired by Andrew Dilnot, a respected economist, statistician and academic.

The Commission was set up by Government as an independent body to make recommendations on how to achieve an affordable and sustainable funding system for care and support, for all adults in England. The most significant group affected by this is the UK’s growing elderly population.

So far, so pedantic, you might think. But I make no apology for spelling out the boring detail: this report is important, it affects all of us, and yet it will pass most people by. In fact, if you’ve read this far, the chances are that you are professionally or personally involved in this issue.

If the report achieves nothing else, it will have highlighted that not only do most people not think about how they will plan and prepare for an extended old age, they also do not even want to think about it. As with individuals, so with society: age, ageing and death remain cultural taboos in the UK, Europe’s most ageist society. It is now that bit harder to bury your head in the sand: one of the biggest secrets of ageing – what happens when you can no longer care for yourself – has now been revealed to a wider audience.

And what happens is this: you will live in a care home, which will be much more expensive than you expected. You will have to pay for it all yourself – and the cost can easily be £50,000 per annum for the rest of your life – unless or until your total assets are below £23,350. You – and your relatives – will only discover the full reality of this at a time when you have no other options. As the report states, the current system is ‘confusing, unfair and unsustainable’.

The report makes a number of visionary recommendations. The two most significant are probably these:

· Individuals contributions towards their social care costs – potentially unlimited at present – should be capped.
· The means-tested threshold should be increased from £23,250 to £100,000.

We will have to wait and see what actions the Government now takes. The total cost of the recommendations is estimated at £1.7bn and the funding considerations include increased taxation, national insurance schemes and private insurance schemes. None of these are likely to be politically attractive.

But one thing’s for sure: the secret is now out. Can you and your family afford to live longer?

----------------------

To read the report in full, http://www.dilnotcommission.dh.gov.uk/

To discuss how rhc advantage could help your organisation, or to read our research report on ‘marketing and mature audiences’, visit http://www.rhcadvantage.co.uk/

Meet the new boss…why older people are finding the new Government too taxing

Part of my job involves talking to a lot of older people. This isn’t too taxing and many of them are my friends in any case. A number have commented on my last piece headed ‘we won’t get fooled again’ which looked at what the new Government might mean for older people.

They are telling me that they are unhappy with the Government’s stated enthusiasm to increase the rate of capital gains tax for personal assets. One person suggested that I might select as the theme for my next article another line from the same song - ‘meet the new boss, same as the old boss’. So I have.

For many pre-retirees and retired people, this proposed increase feels like a reversal of what might have been expected from a conservative majority. To conservative voters, it is seen a betrayal of basic principles. In fact, the plans are those of the LibDem minority, adopted by the coalition for reasons of political expediency. Meet the new boss, indeed.

There are a number of reasons why an increase in capital gains tax - from the current level of 18% to a straight 40%, with no taper relief, no indexation - would be very bad news indeed for many pre-retirees and retired people. The main reason is quite simple: their retirement plans depend upon the sale of property and financial assets they have accumulated during their working life. If the tax increase goes ahead, the tax to be paid on the sale of these assets would more than double, meaning that the net sum they would realise would decline by more than 25%.

If this is to be the case, then the Daily Telegraph and others may have a point in describing it as ‘daylight robbery’.

One explanation for this is that the politicians and public sector employees who devised it are insulated from the real world. We will not discuss here the scandalous abuse of taxpayers funds by politicians, although we should give a special mention to the Environment Minister (of all people) who only this week was apparently using a Government limousine to take her to her game of tennis. And we will not annoy ourselves by dwelling on the salaries, job security and protected pensions of the public sector.

For all of the people I have spoken to, capital gains are not the result of short-term speculation or tax avoidance schemes. They are the result of prudent long-term saving in order to fund retirement – much as the Government is likely to be encouraging us to do. The facts are these:
• The state cannot afford the burden of supporting the increasing number of people of retirement age. Initiatives by individuals to provide for themselves should be encouraged.
• Private pension schemes with a guaranteed salary-related pension are no longer the norm in the private sector.
• Working until retirement age is no longer the norm.
• Many people work for themselves and do not have private pension schemes.

Given all of this, it is not surprising that many people have chosen to save for their retirement through the purchase of shares and property. As has been repeatedly pointed out, the people affected are not a small minority of wealthy people, but a large proportion of the working population.

This agency does not have political affiliations, but we feel obliged to report the views expressed to us so forcibly by so many people. We are not alone. Dissent has included a sustained newspaper campaign, rumblings by backbench conservatives, and expert opinion that a tax increase would be counter-productive in economic terms.

All of this suggests that the Government’s plans are likely to be watered down. Let us hope so.

For further information about how we can help your business address the challenges and opportunities of the ageing UK population, visit www.rhcadvantage.co.uk or email info@rhcadvantage.co.uk for our free research report.