By Debbie le Quesne

Pensions and the care costs perils of cashing in

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George Osborne has given all of us more freedom to handle pensions. The up side is that we can cash in our pension pots and for those who have been fortunate with investments, it opens a plethora of financial and/or self indulgence opportunity.

The down side, people could lose their right to free social care ­– something that has only just emerged from the Budget fallout.

At the weekend both the Joseph Rowntree Foundation (JRF), which works to combat poverty, and Age UK,  Britain’s largest charity for the elderly, said people without large assets who cashed in pension savings could become trapped into paying care costs which they would have avoided if the money had remained invested in a pension.

Excuse me if I seem a little cynical here, but does anyone else think that there many have been a hidden agenda in Mr Osborne’s generosity about investments.

It all comes down to what the pensions experts say as assets. I’m all for reining in the Nanny State and letting the elderly take responsibility for their own actions. But for some a word of caution would be wise.

A piece in the Guardian said: “Under plans for the future funding of social care, to be introduced in 2016, money held in pension schemes is not counted as an asset when calculations are made about how much an individual has to contribute to their own care.

“But if the money is taken out of a pension and held as savings or put in another investment it would be counted.”

The JRF warned . . .

“Should pensioners buy property or put pensions into their savings, that will be taken into account as part of their asset base, which could mean they have to pay for care costs in later life.”

And Age UK, said people would need to bear in mind that drawing down on their pension could make them ineligible for free social care.

I wonder why this wasn’t said during the Budget speech?


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