Proposed social care plans impact equity release
Experts have shared their thoughts on the proposed dementia tax and the potential impact it could have on the ability of pensioners to top-up their income through equity release.Pledged within the most recent Conservative manifesto, the reformed social care plans aimed to align the means test for both domiciliary and residential care. The minimum threshold for state-paid care will be risen to £100,000 for both types of care, with the asset assessment including the value of a property. Previously, this was only the case for residential care.
Andrea Rozario of Bower Retirement highlighted how this could impact pensioner plans to rely on equity release in later life.
As pension pots shrink in the current economic climate, more retirees are using their property as a means of bolstering their income in later life. However, Rozario highlights the proposed social care changes may mean they are not able to release quite as much as they otherwise would have been able to.
She drew attention to the findings of the Dilnot Commission, who claim that 1 in 10 pensioners could pay six-figure sums for their social care. With the Conservative plans to take the property value into consideration, this could impact the amount of wealth that is passed on to children, reducing it heavily.
Rozario also comments on the need for the industry to react to these changes, as well as the growth of equity release demand in general. At a time where retirees are relying on their property for both financial wellbeing and health in later life, it is essential to provide consumers with the best long-term advice.
A joint project between several regional law firms, Equishield provide professional legal advice for Equity Release Mortgages across England and Wales. More information can be found on their website.