This document discusses the aging population in the UK and the rising costs of elder care. It notes that the population aged 65+ has increased significantly since 1931 and will continue growing. Currently over 418,000 people live in residential care facilities in the UK. The average cost of a private nursing home is £563 per week but can be higher. Various legislative acts are also discussed regarding eligibility for state assistance and means testing. Options for funding long-term care include using savings, annuities, and state benefits. A case study of Harry explores solutions like an immediate needs annuity that could fund his home care costs while preserving assets to pass on.

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Care Fees Planning
with

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Brian Fisher
Marketing Manager
Lifetime Care

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The Ageing Population
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1931 1961 1991 2001 2021 2031 2041
UK Population aged 65 +
Sources: 1931-2001 Census data
2021-41 Government Actuary’s 2006 based projections
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The Ageing Population
UK Population aged 85 +
Sources: 1931-2001 Census data
2021-41 Government Actuary’s 2006 based projections
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1901
1931
1951
1961
1971
1981
1991
2001
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2004
2005
2006
2010
2016
2021
2026
2031
2036
2041
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2056
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UK Population aged 85+
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You are here
Sources:1901-2001 Census data
2002-61 Government Actuary’s 2006 based projections

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The Legal System
• Wills and Estate Planning
• Transfer of Assets......
• Solutions for those who are unable to look
after their own financial affairs.
–Power of Attorney
–Enduring Power of Attorney
–Lasting Power of Attorney (England and
Wales only)

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The Facts
• 418,000 in residential care
• Currently 15% of people aged 85 and
above receive care in a Care Home or
Long Stay Hospital.
Source : Laing & Buisson, Care of Elderly People
Market Survey, 2010

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The Cost of Care
Care homes with nursing:
The average cost of a private care home with
nursing in the Northern Ireland is
£563 per week
Source : Laing & Buisson, Care of Elderly People Market
Survey, 2010
….but can cost considerably more.

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Relevant Legislation
• National Assistance (Assessment of
Resources) 1992
• HASSASSA 1982 & Adjudications Act
1983
• Income Support (General) Regs. 1987
• National Assistance Act 1948
• Insolvency Act 1986
• Health and Social Care Act 2001

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Legislation
NHS & Community Care Act 1990
• Law in April 1993
• Encourages care at home and in the
community
Source : NHS & CCA 1990 Policy Document
• Reduces State financial burden

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Means Testing
• Assets over £23,250 (in N. Ireland)
which can include your property
• Health and Social Care Board set
maximum limits for cost of care
• All available income compared with this
figure

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When home may be disregarded
• Spouse/partner still resides in dwelling
• Relative over 60 resides in dwelling
• Relative with incapacity resides in dwelling
• Dependent child under 18 resides in dwelling
• First twelve weeks after entering a care home
Source: Charging for Residential
Accommodation Guide (C.R.A.G.)

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Deprivation
• Must be deliberate deprivation
• No time limit needed to prove
• 6 months - recovery from recipient
• After 6 months - no case against recipient
Source : Charging for Residential
Accommodation Guide (C.R.A.G.)
• Insolvency legislation

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The Health & Social Care Act 2001
• Introduced “free” nursing care
In N. Ireland single rate of £100.00 per week
Payable by the Health and Social Care Board directly
to the care home
• Property disregarded for the first 12 weeks
• Deferred Payment Scheme

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State Benefits
• Attendance Allowance(2013/14)
Higher rate - £79.15 per wk
Lower rate - £53.00 per wk
• Carers Allowance - £59.75 per wk
• NHS Continuing Care

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Care Funding Solutions
• Pay from income
• Use investments to produce an income
• Draw down capital
• Immediate Needs Annuity

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Immediate Needs
Annuities

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Immediate Needs Annuities
For those already requiring care.
• Regular monthly benefit
• Single premium
• Care at home or in a Care Home
• Paid for life
• Benefits can be indexed
• Premium Protection Option
• Tax free - paid to registered care provider
• Taxable - when paid to policyholder

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Options:
• Indexation Level
RPI
RPI+2%
Choice of 3% to 10%
• Premium Protection
Protects : 25%, 50%, 75% of total premium
• Long Term
• Short Term (first 3 or 6 months)
Immediate Needs Annuities

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Meet Harry

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Care at Home
• Harry is aged 79
• Currently in a wheel chair
• Suffered a stroke last year
• Paralysed down one side
• Determined to stay at home
• Doesn’t want to sell his house

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Current situation
• Current Income from all sources £21,800 net p.a.
• Domiciliary Care Costs £49,700 p.a.
• Household expenses £ 7,500 p.a.
• Shortfall in income £35,400 net
p.a.
• Capital £150,000 Investment portfolio
£ 50,000 National Savings Certificates
£ 30,000 Building Society
• House £550,000 he wants to pass on
These figures are for illustrative purposes only.

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Harry’s concerns…….
• Worried that he is a burden to family
• Choice of care
• Would like to be financially independent
• Worried about having to leave his house
• Would like to leave an inheritance

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Family’s concerns…...
• Dad secure and well looked after
• Capital running out
• His father lived to 90
• Although suffered a stroke still strong and
mentally alert

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Options available
• Invest the capital to produce income
• Achieve a typical 3.5% net return on £230,000
= £8,050 p.a.
• Current Income £21,800 + £8,050 = £29,850 p.a.
• May have to move into a care home
• Meet the care costs from capital
• Risk the capital being used up and having to sell the house
These figures are for illustrative purposes only

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Solutions
• Purchase Immediate Care plan
– Cost a lump sum of £143,955
– Provides £35,400 p.a. increasing by 5% p.a.
• Tax Effective
– Tax free benefits paid to registered care provider
• Surplus capital of £86,045
– £11,045 for immediate access
– £75,000 invested for legacies
These figures are for illustrative purposes only.

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Harry’s views
• Choice of care
• Financially independent
• Flexibility for care cost increases and
personal spending money
• Not a burden on family
• Should be able to leave an inheritance

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Family’s views
• Father able to stay at home
• Predictable net income
• Additional capital for additional expenses
• Peace of mind

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Government proposals...
2017?...2016?... 2015?.....
The Care and Support Funding Reform Proposals:
• ONLY APPLY TO ENGLAND!
• Introduce Longevity Cap of c.£72,000
• Increase means test threshold to £118,000
• Introduce accommodation charge of c.£12,000 pa
• A Universal Deferred Payment Scheme

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Friends Life Company Ltd , the provider of the Lifetime Care range of plans, is
authorised and regulated by the Financial Services Authority, register No 185063
(www.fsa.gov.uk/register/home.do)
A company limited by shares, registered in England No 3291349.
Registered office: Pixham End, Dorking, Surrey. RH4 1QA
As part of our commitment to quality service, telephone calls may be recorded.
The address for written communications is
The Friends Life Centre, PO Box 1810, Bristol, BS99 5SN.
Telephone 0845 30 30 430
Further InformationFurther Information
•Full details of our range of products & services are available from your
Financial Adviser
•This presentation is based on our understanding of current Law and HM
Revenue and Customs practice which could change.

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Navigator Financial Planning Ltd
3b Milltown Hill
Warrenpoint
Co Down BT34 3QY
T: 028 3085 1199
E: david@navigatorFP.com
Navigator Financial Planning Ltd is authorised and regulated by the Financial
Conduct Authority. FCA registration no 587701.
Further InformationFurther Information

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Care Fees Planning
with