OBR warns of big tax rises as population ages

Hot on the heels of the Dilnot report recommending additional spending on elderly care to the tune of an extra £1.8 Bn per year, the FT today discussed a report released by the Office of Budget Responsibility.  The OBR reported:

• Pressures from an aging population would require a tax rise of £22 BILLION per year in 2016, if the UK is to achieve a reduction of its public sector debt from 84.5 to 40% of GDP by 2060.
• This increase reflects increases in Health, Long term care, and state pension.
• The OBR also conceded that its projections were extremely sensitive to different assumptions, the most important of these is the assumed modest rise in health spending.  With a rate of health spending growth closer to the historical average, this would add a further 5% of national income by 2060

Clearly this would suggest that the "unmentionable issue" of ongoing state funding for long term care for an increasingly elderly population cannot continue to be pushed onto future generations through increased tax.  I have spoken in my last post about the very real need to unlock some of the property equity gains to self-fund care, but this only applies in the short term. 

So what is the longer term solution?  Many people are still unaware that there is a pensions change being phased in over a few years from 2012 that will require compulsory contribution pension to a "Personal account".  Starting at 1% each, this will grow to 3% contribution by the employee and 5% by the employer.  I believe that this is wholly inadequate, and we need to have genuine debate about the need for greater self reliance in our retirement years, and reducing the dependance on the state for care (as I have oft expressed I think that this can only be provided on a low-quality, low-price basis with increasing rationing).

Being Australian, I look to my experience there.  (There it is called supperanuation).  Briefly:

1.   The government in 1992 recognised the coming major demographic shift and introduced a similar compulsory contribution regime, of 9% (employer funded) and this is to shortly grow to 12% from 2013.
2,   The taxpayer-funded age pension still provides core funding for retirement. The Australian state-funded age pension differs from its counterpart in most other western countries, being both modest (27.7 per cent of average wages for a couple) and means-tested (against both the income and the assets of the recipient).   This policy ensures the age pension in Australia will remain frugal and targeted, and Australians seeking a comfortable retirement lifestyle need to save for it.
3.   Pension savings enjoy various tax benefits. Contributions are deductible (within limits) against taxable income; earnings on investments in superannuation funds are taxed at concessional rates; and superannuation monies drawn down in retirement are lightly (or zero) taxed.

In the UK I believe we will need a much higher level of individual pension savings before we can adequately meet the retirement needs of our ageing population.  As politically unpalatable as the issue may be, I think the OBR report shows that time is running out to address the issue.  Continuing to think solely in terms of taxation rises to fund continued state-provision have gone beyond simply delaying the pain, they now represent a major issue to the whole UK economy.  Please, will someone in government take this issue by the horns?

Elderly and Driving – Do You Need to Act?

It’s a difficult decision. You know how much driving means to your mum or dad. It provides freedom and independence; it improves quality of life; and very importantly, it is a matter of pride.
Yet you’re also beginning to suspect age or illness could be making driving hazardous for your parent – and consequently for other drivers and pedestrians.
As with so many decisions you make in relation to family, it’s hard to detach yourself from the emotional issues. This can apply to both sides of the argument because it’s not just the fear of taking away something important from your parent. The news features alarming stories of the confused elderly driving the wrong way down motorways and even tragic tales of older drivers running over their own partners in driveways by pressing the accelerator instead of the brake or selecting reverse by accident. Of course such stories can make you worry, but the important thing is to consider the question in a balanced way.
There are many people in their twenties who are far more dangerous than drivers in their eighties or nineties who are still perfectly safe behind the wheel. In fact, by taking an active concern you could make differences which keep your mum or dad driving for many years to come.
So, what should you focus on and what action can you take?

Older Drivers Checklist

Eyesight
Probably the most common problem for elderly drivers is vision. Make sure your parent has regular check-ups with the optician and if glasses for distance viewing are needed they wear them! Various eye conditions such as cataracts, macular degeneration, glaucoma and diabetic retinopathy can all have an impact and often because deterioration is gradual it may not be obvious to the sufferer. It could be an idea to suggest your parent doesn’t drive at dusk or night-time if eyesight isn’t what it used to be.
Hearing
It’s easy to overlook how important good hearing is for older drivers. Make sure your parent’s ability to hear is adequate for safe driving.
Physical Ability
Even with power steering, driving requires a good level of dexterity and strength in both arms and legs. This may be an area to consider if you notice any weakness or problems with movement. Sometimes just making sure parents get enough physical activity can help strengthen muscles and dexterity, extending their driving life.
Also take a look at how your parent sits in the car. We all shrink a little with advancing years! Does the seat need to be raised or moved closer to the wheel? Is the rear-view mirror properly adjusted?
Diseases
If your parent suffers from a disease consider the impact of any symptoms on driving. Alzheimer’s disease creates confusion whilst those with severe diabetes could fall into a coma. If you have any concerns you should discuss them with your parent’s doctor.
Prescription Drugs
Medicines obviously help people, but even very common drugs have side-effects to consider. Feeling drowsy or having a slowed reaction time can create serious problems on the road, so read the leaflet that comes with your parent’s medication carefully and discuss any effects they have noticed.
Crucially, if your parent is taking various different medications – some of which their doctor may not be aware of – the interaction of these drugs can cause unexpected side-effects. It’s worth writing down everything your parent takes and checking with the doctor whether any problems could be created.

What Can I Do to Check Mum or Dad’s Driving?

Considering all the above is important, but the bottom line is what your parent is like on the road, so what should you do?
Think While You’re a Passenger
If you don’t normally ride as a passenger with your parent it’s a good idea to find a reason. You can, of course, just tell them you’d like to see how they’re getting on with driving, but you have to judge how they might react to that. It could be that making it seem like a ‘test’ will make them nervous and affect their driving.
You should think about all aspects of their driving:

• How confident are they on the road? Are there any signs of confusion?
• Do certain driving situations cause difficulty, such as junctions or roundabouts?
• Do they keep a good road position? Consider drifting within lanes or coming too close to parked cars.
• Do they indicate and turn/change lane in a safe manner?
• Do they keep a safe distance from the car in front?
• Is driving speed good? Remember very slow drivers can also create a hazard.
• Do they find it easy to turn the steering wheel or change gear?
• Do they scan the road properly, including using mirrors?
• Can they reverse safely?
• Can they cope with very bright or dim light?

If you have any concerns then it’s time to talk. Often this can just be a matter of reminding them about good driving practice to keep them and others safe. After many years of driving we all fall into bad habits! If it’s more serious then you have to consider as a family what’s best and consulting the doctor may once again be important – not least because this helps take out the emotional element for both you and your parent.
Check the Car
Now and again just take a quiet look at your parent’s car. Have there been any scrapes or dents? This could be a sign of driving difficulties.
You should also make sure the car is fully roadworthy – check tyre pressures, treads and oil levels.
Take Positive Action
Talking through your concerns is a positive thing to do and can actually help keep your parent on the road. If you have seen issues which worry you then act. Constructive advice for your mum or dad can improve their driving and did you know many driving schools offer courses for older drivers? This can be the perfect way to sort out those problems and help your parent keep his or her independence.

My Parent Ought to Give Up Driving – What Should I Do?

All of the above should help you in coming to a decision, but if you feel it really is time for your mum or dad to stop driving this is incredibly difficult, so how should you approach it?
Firstly, be sure. Mild problems should not lead to overreaction. Remember what a difference this will make to your parent’s life.
It’s important to deal with this as a family, so make sure everyone’s on board. There is no perfect way to raise this with parents – so much depends on the personalities involved – but the important points are:

• Stress how this is a question not only of their safety, but that of other road users and pedestrians.
• Talk though the specific facts which have led you to this decision.
• Make sure you include positive alternatives. Maybe the family can pull together to ensure plenty of people are available to drive them. Have clear information about the schemes in your area to help the non-driving elderly, such as volunteer hospital drivers. The more you can provide options to reduce damage to their lifestyle the better.
• Involve the doctor. He or she will provide the objectivity which may help convince your parent it’s time to hang up the keys.
• You could be surprised. In many cases elderly drivers have had concerns themselves or even had frightening near-misses which they haven’t shared. Sometimes a loved one raising their own concerns can be the push they secretly wanted to call it a day.

The bottom line is that given the choice of limiting your parent’s independence or seeing them badly hurt it becomes clear there’s actually no choice at all.
Do all you can to help your parent stay driving safely on the road, but when it’s clear that time’s up you can’t afford to put it off. The difficult decisions are almost always the most important ones.

Honest and Caring Advice

At Nobilis the elderly matter, but so do their families and we do all we can to support everyone in the difficult situations brought on by age.
If this article has raised questions or concerns you would like to discuss our friendly team has a great deal of experience. Whether your loved one is being looked after through our in-home care service or not, we’re happy to take some time to discuss any issues you may have about elderly driving problems.
Have a supportive and informative chat with us on 0845 680 0225

Elderly Parents – Planning for the Future

Growing old brings many challenges – not only for the person experiencing the difficulties of age. Looking after the needs of your parents when they are no longer able to do so for themselves can be demanding, especially if you have your own children to care for.
That’s why it’s wise to start planning ahead. Organisation and forethought can save you time and stress, as well as making it easier for your mum or dad. The more you can set in place before it’s needed, the more you will smooth out the bumpy journey we all face in one shape or another.

It’s Good to Talk!

Whilst it may not seem like a tempting prospect, talking these issues through with your parents is one of the most helpful things you can do. This makes sure there is clarity about what needs to be done and in the end will prove very reassuring for all concerned.
No one likes to think about the time when they won’t be able to look after themselves, but just as disease won’t magically go away without treatment, old age brings difficulties that won’t disappear by not thinking about them. Preparing for all possibilities is just like prompt medical treatment – it makes things better sooner.
If your mum or dad would find it easier to talk about such matters with someone else that’s fine. It can be very emotional for both you and them to talk about these issues, so perhaps sort this out with a trusted friend or relative.
However you handle it, make sure you address the following areas:

• Be clear about what your mum or dad wants. What scares them about the future? Knowing this can help you build in reassurance. What are their needs – the most important things to provide for and prioritise to give them the quality of life they want?
• Find out what preferences they might have for housing. If living at home isn’t possible, what would be the preferred alternative?
• Following on from this, what is the financial situation? The average care home costs £36,000 a year and in the south this can be £50,000. Those with over £23,250 in capital (which can include property) will receive no state help with these costs so it’s worth clarifying your mum or dad’s finances and perhaps seeking professional advice.
• Medical care has many implications. The time could come when you have to make decisions on behalf of your mum or dad. Consequently it’s important for you to understand their wishes.

Legal Planning for the Elderly

We live in a legalistic world and sorting out legal issues can be very time-consuming. You don’t want to deal with that during difficult times, so get it sorted now. Make sure your parent has:

• A legally drawn-up will that’s fully up to date.
• Lasting power of attorney. This gives you or someone else the legal power to make decisions on behalf of your parent if he or she is unable to do so. This relates particularly to housing decisions and finances.
• Advance directives. Power of attorney for healthcare allows you to make medical decisions if your parent can’t whilst a living will sets out your parent’s wishes for medical care.

Researching Support Services for the Elderly

Your mum or dad is likely to need support from many areas in their later years so find out now what the possibilities are in your area.

• Make a list of all the services available for the elderly and infirm, whether council or private.
• Talk with homecare businesses, such as the friendly team here at Nobilis, and visit a few care homes to be clear what the options are.
• If you don’t live close to your parent, make sure you have all useful contact details, such as doctors, solicitors and home care agencies. Even with the internet, having a local phone book is handy. You should also establish a neighbour or volunteer who is happy to check in on your mum or dad in case of a problem.

Don’t Neglect Yourself!

When the time comes for you to become responsible for your parent’s care it is vital for you to establish structures to protect yourself. The process can be time-hungry and stressful but so many sons and daughters feel they can’t put themselves first sometimes.
The truth is, you have to. It’s not making your parent any less of a priority; it’s simply making sure you are at your best. If you’re run down, stressed and neglecting your own needs you’re going to be far less effective at helping your mum or dad.
So build this into your planning. Work out realistically what you can do and sort out who can deal with the rest. That might be friends and family, it might be local services such as in-home healthcare, but if you draw up your plans now you won’t feel you have to take it all on when the time comes. This will make things better for you and your parent.

Honest Advice

At Nobilis we obviously provide in-home care, but as part of our reference bank this article is not intended simply as a sales pitch. At the heart of our service is recognition of the difficulties faced by families when their loved ones can no longer look after themselves. It was personal experience of this which led to our founders establishing the company.
That’s why we have put together these articles and whether you are thinking of using our services in the future or not, we’ll be happy to give you any advice you want about this daunting area.
No one wants to think about the possible difficulties looming darkly ahead, but you can lighten the horizon with a little planning. Call us now if you’d like help with that. No charges, no obligations, no hard sell – just people who understand what it’s like and know how to deal with it.
Telephone – 0845 680 0225

Why I don’t think the Dilnot report matters

Social care has been in the news a lot lately, which is great as this important issue is rarely on the mainstream political agenda.  Why not? Because for politicians there is no political “win”.

There is an uncomfortable fact that no-one wants to address – the state cannot afford to pay for the level of elderly care we would want for our relatives.  Firstly, there is a demographic bubble in the form of the baby boom generation now retiring, leaving fewer earning and tax-paying adults to fund any state-funded care.  Secondly, post retirement life expectancy has dramatically increased, with more and more of use expected to live to 90+, expectations around the quality of care provided have also risen.  This is not the war-years “stiff upper lip”, “mustn’t complain” generation, this is the “go,go dancing, rock and roll generation” who have grown up with choice and plenty.  Lastly, the public sector is already running an ANNUAL deficit of around £100 billion pounds, with an estimated total debt expected to pass £10 TRILION by 2015, (passing the benefits of spending onto oneself now, onto your children and grandchildren to pay, in higher taxes)

So what is the situation for elderly care right now?

Well, if you have a primary medical condition you will be covered by the NHS.  The reality is that the cost of the NHS has risen from around £2200 per year in 1999 to more that £4500 per family per year today.  As the elderly demographic demands more support, this is expected to double again, so this itself is a huge issue for debate.  If your condition is simply being old and frail (including dementia), you usually do not get NHS funding.  This is then called Social Care and is the remit of the local council. 

My experience of council-funded care has not been a happy one.  Firstly, if you have more than £23,250 in assets you do not quality for council-funded care. Secondly, as social-care budget are squeezed, the allocation of care has been reduced to only those with the most severe needs, leaving many “out in the cold”.  In fact, many studies have shown that lower-level support provided at an earlier stage prevents hospitalisations and larger costs later, but councils generally do not consider this as saving the NHS money is not part of their remit, and besides they only look at this year’s budgets.  Thirdly, they have commissioned services over many years on the basis of the cheapest price.  Witness the results in the 2009 Panorama special “Britain’s Home Care Scandal”.  Fourthly, even if you do qualify for support, many councils are able to charge a client a fee up to the cost of the care provided.  (So you are in effect paying for the care anyway, so what not source it yourself!)

I would also urge you to read this article, where a client is being forced to use incontinence pads at night, because the local council will not fund support for her to use a commode at night.  I believe this is a fundamental issue of human dignity, however this has gone to the Supreme Court and sets a dangerous precedent that local authorities can provide the level of care they want to pay for, rather than that needed by the client.  Where do you think council-funded care will go from here?

So what has Dilnot proposed?

It recommends that the government sets a cap on an individual's contribution towards his or her own care costs over their lifetime, with the government meeting any costs above the cap. Dilnot suggests a range for the cap of between £25,000 and £50,000, but thinks £35,000 was the most appropriate and fair figure.

In addition, people should pay towards their living costs such as food and accommodation, but again a cap should be set on this. The commission suggests a cap of between £7,000 and £10,000 a year.

Dilnot also recommends that the means-test upper limit should be raised to £100,000 from the current £23,250, allowing people to keep more of the assets they have built up over the years.

And how much would his recommendations cost?

Dilnot’s own estimate is an additional £1.7 billion per year.  I would suggest all of the factors at the start of this article would almost guarantee it will be a lot more than that.  In the current climate I can’t really see how the Chancellor can progress.  Despite “cross party talks”, “serious consideration” and “open debate in parliament”, I think this report may go the way of any number of similar reports into long term care funding over the last few decades, quietly shelved.

So where then?

I think there are two choices:

As a society we decide it is an important enough issue to keep it a main-stream agenda item, and commit to the huge financial outlay as a society.  Or, we acknowledge that there is an individual and family responsibility at work here.  Many of the baby-boomer generation are sitting in properties that have hugely appreciated in their lifetimes, but they do not wish to unlock that value to pay for their care, instead hoping to “pass it on”.  Previous proposal around death taxes have been a means for the State to obtain this value, with the aim of funding a broad social elderly care system.  My observations, again, are that the state is ill-equipped to provide this service, and its track record is clear, let alone the “friction” costs of collecting such taxes, employing managers and consultants etc.

Alternatively, and this is what we at Nobilis are seeing more of, is that the adult children who have a genuine concern for their parent’s welfare and are not willing to put their faith in a council-based system, but are arranging and paying for this care themselves.  This allows them to preserve their parent’s house/asset if that is important, but in reality most simply want their parents to remain as comfortable as possible in their own homes with dignity.  Some do this with the assistance of partial value-realisation through equity-release, while still gaining the benefits of their parents living at “home”.

While I think there will also be a real need for a “safety net” for the worse off in society, I believe the Dilnot recommendations have been naive, and leantoo far in preserving the assets of those who could afford to pay for their own care, passing on the additional costs to future generations.  The assumptions of a state-run system of social care also fill me with dread, as I have seen how this path to the lowest quality/cheapest price this will provide no dignity to my parent’s generation.