Isa reforms could ease financial burden

TODAY’S findings by Which? are another wake-up call for action to prevent Britain sleepwalking into an even greater care funding crisis than we have today.

The vast majority of older people have no savings set aside specifically for the care they might need.

I say it’s time for Government to start identifying ways of finding funding today for the care needs of tomorrow.

Politicians have failed to pre-allocate any money at national or local level, so they have a duty to help people think about making care funding plans.

Older citizens have saved responsibly through their life – building up pensions and ISAs.

Eight million over-60s have saved £300billion in ISAs, often with no specific purpose.

New incentives to keep some of that money untouched, in case they need care, could alleviate the care crisis threatening to engulf us, easing the future burden for them, their families, younger generations and the state. Of course the problem is so enormous this won’t solve the crisis on its own. A range of measures is needed. Allowing tax-free pension withdrawals could also help.

Ideally, Government should help people pool risk, with everybody paying in something for a basic level of state care if needed.

As ISAs may lose 40 per cent in inheritance tax, they are often spent early.

Allowing people to earmark a limited amount which will pass on tax-free, could give people a reason to keep their ISAs rather than spend them all.

This is just one of the reforms that we need – it won’t solve the crisis on its own, but even a small part of the £300billion in ISAs which the over-60s have saved could provide a great start to the solution.