Millions of Britons could be automatically signed up to a new scheme to help pay for social care later in life under proposals put forward by a former pensions minister. People aged 40 and over, including pensioners, would be enrolled into paying a monthly contribution towards their future care costs. However, anyone who did not want to take part would be allowed to opt out.
Proposal from former pensions minister
The idea has been put forward by Sir Steve Webb, a former Liberal Democrat pensions minister who now works for consultancy firm Lane Clark & Peacock (LCP).
Under the proposal, taxpayers would pay a social care premium equivalent to an extra 1% on the basic rate of income tax, with the maximum payment coming to just over £30 a month.
Discounts for contributors
In return, people would receive a discount on their personal care costs depending on how long they had paid into the scheme. After one year, they would receive a 4% discount, rising to 8% after two years. Those who contributed for 25 years would qualify for fully funded personal care.
The scheme would work in a similar way to automatic enrolment for workplace pensions, which has helped more than 11 million people save for retirement since 2012.
Support for the scheme
Sir Steve said: "Pensions automatic enrolment is a hugely successful policy which is admired around the world." He added: "There is no reason why the same approach could not be applied to the thorny problem of social care funding."
The former minister said people currently face the possibility of losing much of their savings if they need expensive care in later life. Money raised through the scheme could also go towards helping older people stay independent for longer, including adapting homes and providing more support for unpaid carers.
Government considerations
The proposals come as the Government considers how to improve social care funding in England. LCP estimates the scheme could raise around £3.5billion a year, even after allowing for people who choose not to take part. However, the plans remain a proposal and have not been introduced by the Government. There is currently no requirement for Britons to make these payments.
