Forget gimmicks like the Care Isa: there’s a better way to save for old age

SIR – The Government does not need to flirt with minor gimmicks such as a Care Isa (report, August 19) to help people make provision for their care needs in old age.

All it needs to do is bring local government-funded social care inside the NHS, integrate social and nursing care efficiently with other NHS services, and pay for it by requiring all retired people to start paying National Insurance Contributions.

Given increased longevity and much improved average pensioner incomes, there is no good reason why NICs are still only paid by employed people and employers. Pensioners would pay NICs in exchange for a promise of high quality social and nursing care, should it ever be needed, paid for by the state.

People could top up these payments with their own money if they desired an even higher level of service from a private provider. The cost of such insurance would be much less per person than trying to buy it privately, and would bring peace of mind to millions. Pensioners on low incomes would be protected through the use of existing tax allowances for NICs. Antony Atkins

Chinnor, Oxfordshire

SIR – Exempting Care Isas from inheritance tax would simply deliver a bonus to the beneficiaries of the small minority who leave estates worth (from 2020) £1million or more and who die without having spent a significant part of their declining years in a care home.

The suggested exemption would also deprive the state of the revenue that would otherwise have been payable on assets held in unused Care Isas. That revenue could more effectively be used to encourage the development of a social care insurance market by allowing tax relief on care insurance premiums linked, perhaps, with the implementation of a cap on the total amount of care fees payable by an individual. WJ Ravenscroft

Warrington, Cheshire SIR – At the last election the Conservatives proposed a “dementia tax”, which had to be abandoned as soon as its unpopularity became clear. We now have another proposal that ignores the obvious solution: a cap on care payments, as recommended by the Dilnot Commission in 2011.

The problem with the Care Isa is that everyone will need to save for the whole cost of their care for as much time as they might need it, even though fewer than 40 per cent will need to move to a care home, and then only for one year on average.

The advantage of a cap is that an insurance market can develop. Insurers will know their maximum commitment to each customer, and the actuarial risks involved. The advantage to the Government is that it can set the cap at a level which is cost-neutral. The Dilnot Commission recommended £35,000; but even if it was twice that, insuring for one’s own needs would still be an attractive option. Julian Gall

Godalming, Surrey