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

The PPF launch the 14th edition of The Purple Book
In its fourteenth edition of The Purple Book, the Pension Protection Fund (PPF) reveals a strong link between investment risk and underfunding in defi
Industry comment on the 14th edition of the PPFs Purple Book
Industry comment from Hymans Robertson Lincoln Pensions and Clara Pensions on the 14th edition of the PPFs Purple Book
Final report of ACA 2019 Pension trends survey
ACA survey report says momentum of pension reform needs to be built upon with plans set out to increase automatic enrolment minimum contributions alon

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS


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