Pension reform could fund adult social care says law firm

Reform to the pension system could help people meet the future cost of adult social care, a new report has suggested.
In Sickness and in Health: Reforming Pensions and Social Care, published by law firm Squire Sanders, says that people should be able to earmark some of their pension in advance of retirement to provide for care. Pension savers should also be allowed to split and defer their tax-free lump sum entitlements to pay for care costs.

Catherine McKenna, leader of the Pensions Practice Group at Squire Sanders, said: ‘The UK Government has laid out a cap on lifetime contributions to adult social care costs in the current Care Bill.

‘Even so, funding solutions need to be found to meet the costs of care and the Government has challenged the pensions and insurance industry to find them. If the Government is serious about supporting funding for care, then it has three main options: provide extra tax incentives to save for care; compel us to save for care; or re-shape pensions and tax legislation to allow pension savers to make choices about whether they save for care, and how they do so.’

However, the paper said more flexibility is needed in existing tax relief to enable allowances to be transferred between saving vehicles and between couples.