Investment - Articles - Care ISA is no solution to care funding crisis

 “It is very difficult to see how a care ISA would make a meaningful contribution to tackling the social care funding crisis. The latest figures suggest that 19 out of 20 estates pay no inheritance tax, suggesting that an IHT break would be irrelevant for most savers. In addition, care costs can vary hugely between those who run up six figure bills after extensive residential care and those who face negligible costs. It would be impossible to know in advance how much to save into a care ISA, with most people saving too much, and some people saving far too little. There would also be issues about whether people whose needs changed could get money out of a care ISA without penalty, and rules would be needed to stop people shovelling money into a care ISA veryl ate in life purely as a form of inheritance tax planning.

 Steve Webb continued: Fundamentally, the solution to care funding has to involve a pooling of risk, where those who end up paying ‘catastrophic’ end of life care costs can fund those costs from a common pool. This is likely to mean a mix of social insurance, particularly for those with low incomes, and private insurance. We urgently need fresh thinking on how to re-create a private market for care insurance, and the proposal of a ‘care pension’ could go some way towards this”.