Pensions - Articles - Jeremy Hunts social care plans may undermine AE for pensions


The launch by Conservative leadership candidate Jeremy Hunt of plans to tackle the social care crisis risk undermining the whole system of automatic enrolment for pensions, according to Royal London director of policy Steve Webb.

 The former Health Secretary has proposed a package of measures to improve the provision of social care including:
 - Encouraging people to save for social care costs ‘as they do for pensions’;
 - An overall cap on lifetime care costs and a promise that ‘no-one will have to sell their home’ to pay for care;
 - Tax breaks for families who look after loved ones in their own homes;
 - Increased public spending for social care from ‘Philip Hammond’s £26 billion ‘headroom reserves’ (though it is unclear where the funding would come from on an ongoing basis)
 - Closer working between health and social care systems

 It is the first of these proposals that is being identified as a potential threat to pensions automatic enrolment. A separate system of enrolment into a ring-fenced savings product for care would create extra cost and bureaucracy for employers but could lead to people opting out of both care and pensions savings, especially if combined contribution rates were too high. This is particularly a risk for younger workers who have successfully been enrolled into pensions but who are likely to have little interest in setting aside money for a cost which may not arise for more than half a century. Once the norm of saving into a pension has been undermined, large scale opt-outs could follow.
 
 Commenting, Steve Webb, Director of Policy at Royal London said: ‘It is welcome to see a candidate for Prime Minister coming forward with ideas on tackling the social care crisis. But there is a real risk that creating a new system of automatic enrolment for care costs could undermine the massive achievement of getting ten million workers enrolled into workplace pensions. These plans would greatly increase the complexity of the system, with individuals presumably able to opt out of either or both schemes. Young people in particular are likely to attach very little value to saving for a cost which may not affect them for over half a century. Helping people to build bigger pension pots so that they can buy care insurance later in life would be a very positive step. Setting up a rival system of automatic enrolment would not’.
  

Back to Index


Similar News to this Story

State pensioners to get above inflation triple lock boost
The Office for National Statistics has announced that the Consumer Prices Index (CPI) rose by 2.8% in the 12 months to February 2025, down from the 3.
Pensions for 9 in 10 DC savers invest in productive assets
TPR says larger schemes more likely to have the right governance standards and invest in a diversified portfolio. Smaller schemes seem less likely to
Transfer Activity index fell to record low in February 2025
XPS Group’s Transfer Activity Index has fallen to the lowest observed rate since the Index was established in 2018. In February 2025, there was an ann

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.