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john80

rjsterry said:

Social care is means tested and recipients have to contribute where they have the income or assets to do so.

I believe you main asset in your house is excluded from this is it not.

pblakeney

john80 said:

rjsterry said:

Social care is means tested and recipients have to contribute where they have the income or assets to do so.

I believe you main asset in your house is excluded from this is it not.

You might want to read this -
https://www.nhs.uk/conditions/social-care-and-support-guide/help-from-social-services-and-charities/financial-assessment-means-test/

Stevo_666

pblakeney said:

john80 said:

rjsterry said:

Social care is means tested and recipients have to contribute where they have the income or assets to do so.

I believe you main asset in your house is excluded from this is it not.

You might want to read this -
https://www.nhs.uk/conditions/social-care-and-support-guide/help-from-social-services-and-charities/financial-assessment-means-test/

There are exceptions where spouse or partner are still in there. Local council excluded the family house from my old dears assessment because I owned half (inherited from my old man).

rjsterry

john80 said:

rjsterry said:

Social care is means tested and recipients have to contribute where they have the income or assets to do so.

I believe you main asset in your house is excluded from this is it not.

Nope. You are required to sell it and give all but the last £23K to the local authority to fund your residential care. Many people don't realise this, or think it's all free, but it's not. What's more, the effective rate at which assets are taxed is such that people try to avoid it. A much lower rate that applies to everyone would raise more, be fairer and reduce the urge to avoid it.

john80

rjsterry said:

john80 said:

rjsterry said:

Social care is means tested and recipients have to contribute where they have the income or assets to do so.

I believe you main asset in your house is excluded from this is it not.

Nope. You are required to sell it and give all but the last £23K to the local authority to fund your residential care. Many people don't realise this, or think it's all free, but it's not. What's more, the effective rate at which assets are taxed is such that people try to avoid it. A much lower rate that applies to everyone would raise more, be fairer and reduce the urge to avoid it.

May's 100k is looking pretty generous if you have to leave your house.

rjsterry

john80 said:

rjsterry said:

john80 said:

rjsterry said:

Social care is means tested and recipients have to contribute where they have the income or assets to do so.

I believe you main asset in your house is excluded from this is it not.

Nope. You are required to sell it and give all but the last £23K to the local authority to fund your residential care. Many people don't realise this, or think it's all free, but it's not. What's more, the effective rate at which assets are taxed is such that people try to avoid it. A much lower rate that applies to everyone would raise more, be fairer and reduce the urge to avoid it.

May's 100k is looking pretty generous if you have to leave your house.

Well quite.

Dorset_Boy

rjsterry said:

john80 said:

rjsterry said:

Social care is means tested and recipients have to contribute where they have the income or assets to do so.

I believe you main asset in your house is excluded from this is it not.

Nope. You are required to sell it and give all but the last £23K to the local authority to fund your residential care. Many people don't realise this, or think it's all free, but it's not. What's more, the effective rate at which assets are taxed is such that people try to avoid it. A much lower rate that applies to everyone would raise more, be fairer and reduce the urge to avoid it.

You are wrong. You aren't forced to sell the property and give all bar £23k to the Local Authority. The LA has to disregard the property for the first 12 weeks in its assessment. Assuming other assets over the £23k, or after the 12 weeks, you become a self funder and have to work out the best way to pay for your care in the private sector, and only pay for as long as you need it. Ongoing nursing care is state funded, but the 'hotel' costs aren't.
It is an area where advice on the funding options needs to be taken. The property could be rented out instead of sold for example. It doesn't have to mean the whole estate is used up paying for care if the funding advice is heeded, but if you just drawdown on the sale proceeds from the property or other assets, then living too long could mean very little left. Alternative you use a care needs annuity, sacrificing some of the estate to preserve the majority.

rjsterry

Dorset_Boy said:

rjsterry said:

john80 said:

rjsterry said:

Social care is means tested and recipients have to contribute where they have the income or assets to do so.

I believe you main asset in your house is excluded from this is it not.

Nope. You are required to sell it and give all but the last £23K to the local authority to fund your residential care. Many people don't realise this, or think it's all free, but it's not. What's more, the effective rate at which assets are taxed is such that people try to avoid it. A much lower rate that applies to everyone would raise more, be fairer and reduce the urge to avoid it.

You are wrong. You aren't forced to sell the property and give all bar £23k to the Local Authority. The LA has to disregard the property for the first 12 weeks in its assessment. Assuming other assets over the £23k, or after the 12 weeks, you become a self funder and have to work out the best way to pay for your care in the private sector, and only pay for as long as you need it. Ongoing nursing care is state funded, but the 'hotel' costs aren't.
It is an area where advice on the funding options needs to be taken. The property could be rented out instead of sold for example. It doesn't have to mean the whole estate is used up paying for care if the funding advice is heeded, but if you just drawdown on the sale proceeds from the property or other assets, then living too long could mean very little left. Alternative you use a care needs annuity, sacrificing some of the estate to preserve the majority.

In my particular experience, renting the property would cover 16% of the care costs. I suspect similar applies for large swathes of notLondon. An annuity would similarly have to be extraordinarily generous to cover the care costs. So, not that I disagree with any of your points, but they aren't available for everyone. And bottom line is if you are a self funder you have to contribute one way or another.

Dorset_Boy

Don't compare a care needs annuity with a pension annuity. The rates are massively different. £100k purchase price would typically provide £20-25k pa increasing at 5% pa.

It was important to point out that you were very wrong in stating how self funders pay for their care.

Also key is to go and see a qualified financial adviser in long term care funding if ever involved in the process.

pblakeney

£100k provides up to £25k PA? You’d break even in 4 years. Must get on this. I plan on living for another 40 years. 😂😂😂

Longshot

Dorset_Boy said:

Don't compare a care needs annuity with a pension annuity. The rates are massively different. £100k purchase price would typically provide £20-25k pa increasing at 5% pa.

What's the catch? There has to be one at those rates.

Dorset_Boy

Longshot said:

Dorset_Boy said:

Don't compare a care needs annuity with a pension annuity. The rates are massively different. £100k purchase price would typically provide £20-25k pa increasing at 5% pa.

What's the catch? There has to be one at those rates.

They're fully medically underwritten, and so based closer to individual life expectancy, plus consider the age that someone in care typically is.

Dorset_Boy

pblakeney said:

£100k provides up to £25k PA? You’d break even in 4 years. Must get on this. I plan on living for another 40 years. 😂😂😂

And you wouldn't get such a rate because you wouldn't be needing care, and won't be the relevant age - the clue is in the name of the product, as I pointed out.

rjsterry

Dorset_Boy said:

Don't compare a care needs annuity with a pension annuity. The rates are massively different. £100k purchase price would typically provide £20-25k pa increasing at 5% pa.

It was important to point out that you were very wrong in stating how self funders pay for their care.

Also key is to go and see a qualified financial adviser in long term care funding if ever involved in the process.

Granted I have oversimplified although having been through the process at short notice, opportunities for financial advice are not exactly thrust at you. You seem to know more than me about care annuities, but the pay out you've suggested is still only about half of what residential care costs in my experience.

pblakeney

Dorset_Boy said:

pblakeney said:

£100k provides up to £25k PA? You’d break even in 4 years. Must get on this. I plan on living for another 40 years. 😂😂😂

And you wouldn't get such a rate because you wouldn't be needing care, and won't be the relevant age - the clue is in the name of the product, as I pointed out.

Poncified gambling. I’m gambling that I’ll live longer, they’re gambling I’ll peg it sooner. Be as well selling the house and using draw down. Amounts to about the same. And the circle is complete... 😉

haydenm

Longshot said:

Dorset_Boy said:

Don't compare a care needs annuity with a pension annuity. The rates are massively different. £100k purchase price would typically provide £20-25k pa increasing at 5% pa.

What's the catch? There has to be one at those rates.

The catch is you die.

"The statistics show that the average length of stay in a single residential care home in England that ended in a service users’ death was around 26 months, although this statistic does not include any previous stays in other homes."

https://www.parliament.uk/business/publications/written-questions-answers-statements/written-question/Commons/2017-09-05/8937

Seems like a pretty good investment on the lender's part

rjsterry

haydenm said:

Longshot said:

Dorset_Boy said:

Don't compare a care needs annuity with a pension annuity. The rates are massively different. £100k purchase price would typically provide £20-25k pa increasing at 5% pa.

What's the catch? There has to be one at those rates.

The catch is you die.

"The statistics show that the average length of stay in a single residential care home in England that ended in a service users’ death was around 26 months, although this statistic does not include any previous stays in other homes."

https://www.parliament.uk/business/publications/written-questions-answers-statements/written-question/Commons/2017-09-05/8937

Seems like a pretty good investment on the lender's part

Except that residential care costs are much higher than £20-25k per year.

TheBigBean

pblakeney said:

Dorset_Boy said:

pblakeney said:

£100k provides up to £25k PA? You’d break even in 4 years. Must get on this. I plan on living for another 40 years. 😂😂😂

And you wouldn't get such a rate because you wouldn't be needing care, and won't be the relevant age - the clue is in the name of the product, as I pointed out.

Poncified gambling. I’m gambling that I’ll live longer, they’re gambling I’ll peg it sooner. Be as well selling the house and using draw down. Amounts to about the same. And the circle is complete... 😉

It's a hedge like buying insurance. The opposite of a gamble.

Dorset_Boy

rjsterry said:

haydenm said:

Longshot said:

Dorset_Boy said:

Don't compare a care needs annuity with a pension annuity. The rates are massively different. £100k purchase price would typically provide £20-25k pa increasing at 5% pa.

What's the catch? There has to be one at those rates.

The catch is you die.

"The statistics show that the average length of stay in a single residential care home in England that ended in a service users’ death was around 26 months, although this statistic does not include any previous stays in other homes."

https://www.parliament.uk/business/publications/written-questions-answers-statements/written-question/Commons/2017-09-05/8937

Seems like a pretty good investment on the lender's part

Except that residential care costs are much higher than £20-25k per year.

Residential home costs are typically in the £36-55k pa region. Remember that all bills etc are included in the fees so the resident probably only needs £100 pw extra for other items. Then deduct State Pension and other pensions. If the shortfall is then say £30k pa buy a care needs annuity for that amount. I just used £100k purchase price as an example to demonstrate the return.
If it was a property in the SE being sold then you'd still be left with a sizeable sum.

Also, the length of time in residential homes is around 9 years, in a nursing home it is around 18 months I think, hence the 26 month average figure quoted above.

Of course you could just put the cash in the bank and draw down on it, but there's no certainty or peace of mind that it won't run out. Then what?

pblakeney

TheBigBean said:

pblakeney said:

Dorset_Boy said:

pblakeney said:

£100k provides up to £25k PA? You’d break even in 4 years. Must get on this. I plan on living for another 40 years. 😂😂😂

And you wouldn't get such a rate because you wouldn't be needing care, and won't be the relevant age - the clue is in the name of the product, as I pointed out.

Poncified gambling. I’m gambling that I’ll live longer, they’re gambling I’ll peg it sooner. Be as well selling the house and using draw down. Amounts to about the same. And the circle is complete... 😉

It's a hedge like buying insurance. The opposite of a gamble.

Not if you view insurance as a gamble.
I gamble it may happen, they gamble it won’t. The odds are reflected in the premium.

rjsterry

Dorset_Boy said:

rjsterry said:

haydenm said:

Longshot said:

Dorset_Boy said:

Don't compare a care needs annuity with a pension annuity. The rates are massively different. £100k purchase price would typically provide £20-25k pa increasing at 5% pa.

What's the catch? There has to be one at those rates.

The catch is you die.

"The statistics show that the average length of stay in a single residential care home in England that ended in a service users’ death was around 26 months, although this statistic does not include any previous stays in other homes."

https://www.parliament.uk/business/publications/written-questions-answers-statements/written-question/Commons/2017-09-05/8937

Seems like a pretty good investment on the lender's part

Except that residential care costs are much higher than £20-25k per year.

Residential home costs are typically in the £36-55k pa region. Remember that all bills etc are included in the fees so the resident probably only needs £100 pw extra for other items. Then deduct State Pension and other pensions. If the shortfall is then say £30k pa buy a care needs annuity for that amount. I just used £100k purchase price as an example to demonstrate the return.
If it was a property in the SE being sold then you'd still be left with a sizeable sum.

Also, the length of time in residential homes is around 9 years, in a nursing home it is around 18 months I think, hence the 26 month average figure quoted above.

Of course you could just put the cash in the bank and draw down on it, but there's no certainty or peace of mind that it won't run out. Then what?

Undoubtedly it works in some situations, but far from all. There'll be plenty of people with assets above the threshold, but not enough to buy the annuity they need. Whatever means of funding the care is used, the original point was that the value of the home is not exempted when assessing whether someone must self-fund.

rick_chasey

pblakeney said:

TheBigBean said:

pblakeney said:

Dorset_Boy said:

pblakeney said:

£100k provides up to £25k PA? You’d break even in 4 years. Must get on this. I plan on living for another 40 years. 😂😂😂

And you wouldn't get such a rate because you wouldn't be needing care, and won't be the relevant age - the clue is in the name of the product, as I pointed out.

Poncified gambling. I’m gambling that I’ll live longer, they’re gambling I’ll peg it sooner. Be as well selling the house and using draw down. Amounts to about the same. And the circle is complete... 😉

It's a hedge like buying insurance. The opposite of a gamble.

Not if you view insurance as a gamble.
I gamble it may happen, they gamble it won’t. The odds are reflected in the premium.

Not sure you know what a hedge is, mate.

pblakeney

rick_chasey said:

pblakeney said:

TheBigBean said:

pblakeney said:

Dorset_Boy said:

pblakeney said:

£100k provides up to £25k PA? You’d break even in 4 years. Must get on this. I plan on living for another 40 years. 😂😂😂

And you wouldn't get such a rate because you wouldn't be needing care, and won't be the relevant age - the clue is in the name of the product, as I pointed out.

Poncified gambling. I’m gambling that I’ll live longer, they’re gambling I’ll peg it sooner. Be as well selling the house and using draw down. Amounts to about the same. And the circle is complete... 😉

It's a hedge like buying insurance. The opposite of a gamble.

Not if you view insurance as a gamble.
I gamble it may happen, they gamble it won’t. The odds are reflected in the premium.

Not sure you know what a hedge is, mate.

Eggs not all in one basket. But eggs are eggs. Assumptions are made and risks assessed.
Much like bookies. They allow hedge betting.

rick_chasey

What?

Stevo_666

rick_chasey said:

What?

I think he just showed why you were right in your assessment above.

TheBigBean

rick_chasey said:

What?

I suspect the argument is that everything is a gamble e.g. I gambled by not buying a lottery ticket. The problem with it is if everything is a gamble the word ceases to have any meaning. Therefore, it seemed like something not worth exploring much further.

pblakeney

Kind of.
In an annuity you are hoping you will live longer than expected while the issuer is hoping you don’t. Both are gambling that they will be correct.

TheBigBean

pblakeney said:

Kind of.
In an annuity you are hoping you will live longer than expected while the issuer is hoping you don’t. Both are gambling that they will be correct.

In this case, you are buying nursing care for the rest of your life for a fixed price. No gamble, no need to worry about how long you live. A bit like if you buy a can of coke, you pay a fixed price. Another system might be where you pay double or nothing on a coin toss, but most people would see that as gambling - your argument is that by paying a fixed price you are gambling that you won't win the coin toss, and in my view it renders the word a bit meaningless.

Longshot

TheBigBean said:

In this case, you are buying nursing care for the rest of your life for a fixed price.

This. I understand the desire to cost the annuity provider money by living for another 50 years but, ultimately, TBB's statement is accurate.

If you have time I guess you could shop around between providers to see if there's better rates available but otherwise the deal is one you're willing to partake in or not.

pblakeney

Yes, but the price you pay will be determined by the issuer based on how long they think you will live.
1 Year, cheap; 10 years expensive.