Care fees planning

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Care Fees Planningwith

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Brian FisherMarketing ManagerLifetime Care

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The Ageing Population

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5

10

15

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1931 1961 1991 2001 2021 2031 2041

UK Population aged 65 +Sources: 1931-2001 Census data

2021-41 Government Actuary’s 2006 based projections

MILLIONS

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The Ageing Population

UK Population aged 85 +Sources: 1931-2001 Census data

2021-41 Government Actuary’s 2006 based projections

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1

2

3

4

1931 1961 1991 2001 2021 2031 2041

MILLIONS

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0

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2

3

4

5

6

1901

1931

1951

1961

1971

1981

1991

2001

2002

2003

2004

2005

2006

2010

2016

2021

2026

2031

2036

2041

2046

2051

2056

2061

UK Population aged 85+

M ILLIONS

You are here

Sources:1901-2001 Census data 2002-61 Government Actuary’s 2006 based projections

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The Legal System

• Wills and Estate Planning• Transfer of Assets......• Solutions for those who are unable to look

after their own financial affairs. – Power of Attorney– Enduring Power of Attorney– Lasting Power of Attorney (England and

Wales only)

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The Facts

• 418,000 in residential care

• Currently 15% of people aged 85 and

above receive care in a Care Home or

Long Stay Hospital.

Source : Laing & Buisson, Care of Elderly People

Market Survey, 2010

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The Cost of Care

Care homes with nursing:The average cost of a private care home with

nursing in the Northern Ireland is

£563 per week

Source : Laing & Buisson, Care of Elderly People Market

Survey, 2010

….but can cost considerably more.

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Relevant Legislation

• National Assistance (Assessment of Resources) 1992

• HASSASSA 1982 & Adjudications Act 1983

• Income Support (General) Regs. 1987• National Assistance Act 1948• Insolvency Act 1986• Health and Social Care Act 2001

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Legislation

NHS & Community Care Act 1990

• Law in April 1993• Encourages care at home and in the

community Source : NHS & CCA 1990 Policy Document

• Reduces State financial burden

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Means Testing

• Assets over £23,250 (in N. Ireland) which can include your property• Health and Social Care Board set

maximum limits for cost of care• All available income compared with this

figure

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When home may be disregarded

• Spouse/partner still resides in dwelling

• Relative over 60 resides in dwelling

• Relative with incapacity resides in dwelling

• Dependent child under 18 resides in dwelling

• First twelve weeks after entering a care homeSource: Charging for Residential Accommodation Guide (C.R.A.G.)

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Deprivation

• Must be deliberate deprivation

• No time limit needed to prove

• 6 months - recovery from recipient

• After 6 months - no case against recipient Source : Charging for Residential Accommodation Guide (C.R.A.G.)

• Insolvency legislation

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The Health & Social Care Act 2001

• Introduced “free” nursing care

In N. Ireland single rate of £100.00 per week

Payable by the Health and Social Care Board directly to the care home

• Property disregarded for the first 12 weeks

• Deferred Payment Scheme

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State Benefits

• Attendance Allowance (2013/14)

Higher rate - £79.15 per wk

Lower rate - £53.00 per wk

• Carers Allowance - £59.75 per wk

• NHS Continuing Care

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Care Funding Solutions

• Pay from income

• Use investments to produce an income

• Draw down capital

• Immediate Needs Annuity

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Immediate Needs

Annuities

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Immediate Needs Annuities

For those already requiring care.• Regular monthly benefit• Single premium• Care at home or in a Care Home• Paid for life• Benefits can be indexed • Premium Protection Option• Tax free - paid to registered care provider• Taxable - when paid to policyholder

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Options:• Indexation Level

RPIRPI+2% Choice of 3% to 10%

• Premium Protection

Protects : 25%, 50%, 75% of total premium• Long Term• Short Term (first 3 or 6 months)

Immediate Needs Annuities

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Meet Harry

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Care at Home

• Harry is aged 79

• Currently in a wheel chair

• Suffered a stroke last year

• Paralysed down one side

• Determined to stay at home

• Doesn’t want to sell his house

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Current situation• Current Income from all sources £21,800 net p.a.

• Domiciliary Care Costs £49,700 p.a.

• Household expenses £ 7,500 p.a.

• Shortfall in income £35,400 net

p.a.

• Capital £150,000 Investment portfolio

£ 50,000 National Savings Certificates

£ 30,000 Building Society

• House £550,000 he wants to pass onThese figures are for illustrative purposes only.

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Harry’s concerns…….

• Worried that he is a burden to family

• Choice of care

• Would like to be financially independent

• Worried about having to leave his house

• Would like to leave an inheritance

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Family’s concerns…...

• Dad secure and well looked after

• Capital running out

• His father lived to 90

• Although suffered a stroke still strong and

mentally alert

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Options available

• Invest the capital to produce income

• Achieve a typical 3.5% net return on £230,000

= £8,050 p.a.

• Current Income £21,800 + £8,050 = £29,850 p.a.

• May have to move into a care home

• Meet the care costs from capital

• Risk the capital being used up and having to sell the house

These figures are for illustrative purposes only

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Solutions

• Purchase Immediate Care plan– Cost a lump sum of £143,955– Provides £35,400 p.a. increasing by 5% p.a.

• Tax Effective– Tax free benefits paid to registered care provider

• Surplus capital of £86,045– £11,045 for immediate access– £75,000 invested for legacies

These figures are for illustrative purposes only.

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Harry’s views

• Choice of care

• Financially independent

• Flexibility for care cost increases and

personal spending money

• Not a burden on family

• Should be able to leave an inheritance

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Family’s views

• Father able to stay at home

• Predictable net income

• Additional capital for additional expenses

• Peace of mind

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Government proposals... 2017?...2016?... 2015?.....

The Care and Support Funding Reform Proposals:

• ONLY APPLY TO ENGLAND!

• Introduce Longevity Cap of c.£72,000

• Increase means test threshold to £118,000

• Introduce accommodation charge of c.£12,000 pa

• A Universal Deferred Payment Scheme

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Friends Life Company Ltd , the provider of the Lifetime Care range of plans, is authorised and regulated by the Financial Services Authority, register No 185063

(www.fsa.gov.uk/register/home.do) A company limited by shares, registered in England No 3291349.

Registered office: Pixham End, Dorking, Surrey. RH4 1QA

As part of our commitment to quality service, telephone calls may be recorded.

The address for written communications is

The Friends Life Centre, PO Box 1810, Bristol, BS99 5SN.

Telephone 0845 30 30 430

Further Information Further Information •Full details of our range of products & services are available from your

Financial Adviser •This presentation is based on our understanding of current Law and HM

Revenue and Customs practice which could change.

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Navigator Financial Planning Ltd3b Milltown Hill

WarrenpointCo Down BT34 3QY

T: 028 3085 1199E: david@navigatorFP.com

Navigator Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority. FCA registration no 587701.

Further Information Further Information

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Care Fees Planningwith