The government should allow people to pay for their nursing care by using their pension pots under schemes linking long-term care with pension funds, said insurer and pensions provider MetLife.
If the government accepts MetLife’s proposal, then it will pave the way to flexible income drawdown for people who do not meet the Treasury’s minimum pension income requirement. Peter Carter – the head of product marketing said his company is looking at the practicalities of allowing individuals to access their entire defined contribution pension pots for nursing care.
“Accessing pension funds would allow billions of pounds to be spent on care and could particularly be used by people who have got quite severe impairments. The average stay in long-term care is about four years, so there are circumstances when you could release more money from pensions outside the restrictions of flexible drawdown. This could assist people with reasonable-sized DC pots quite considerably”, said Mr. Carter.
Mr. Carter said long-term care should be allowed for a specific period beyond which the government should pick up any ‘tail’ risk cost of the individual outliving his pension.
“For people with pension pots of, say, £150,000, the cost of long-term care could be funded for four or five years, with the tail risk funded by the Government”, said Mr. Carter.
His view was seconded by Martin Bamford, managing director of Informed Choice. “This seems like a sensible idea. I hope the Government can make some decisions because there has been a lot of talk about long-term care without any solutions”, said Mr. Bamford.