- 74% cannot identify the average weekly cost of residential care
- Less than 20% know which assets are taken into account when
assessing contributions to care
- 19% are considering using equity release to provide finance in
New research by the Equity Release Solicitors' Alliance (ERSA)
has found almost three quarters (74%) of people in the UK are
unable identify the average weekly cost of residential care in
In the week that the Dilnot Commission on
Funding of Care and Support published its findings into the
funding of care and support, ERSA revealed just 26% of people could
identify the average cost of care as £504 per week*. Worrying, 41%
thought it was much less than this, and just 14% of those aged over
66 were able to identify the correct amount.
ERSA discovered more than 80% of people in the UK are unable to
identify which of their assets the Government takes into account
when assessing whether they need to contribute to the cost of
personal care in retirement. While the Dilnot Commission
recommended a cap of £35,000 placed on liable assets after which
people are eligible for full state support, 83% of people are
unaware their bank and building society accounts are taken into
consideration and 85% do not think the value of their home is
included in assessments.
Faced with paying for long-term residential care in retirement,
22% are planning to use their savings and 16% hope to pay for it
out of their pension, while 11% said they are already planning to
use equity release to pay for this - although this rises to 68% of
those aged over 66, suggesting a more realistic attitude towards
the cost of retirement develops as people get older.
At present 19% are definitely considering using equity release
or are planning to in retirement, however 32% of people said a
Government stamp of approval for equity release would make a
positive difference to the likelihood of them taking out an equity
release product in the future, so this figure is likely to
Claire Barker, Chairman of ERSA,
"The Dilnot Commission's recommendations are to be welcomed. The
current system is confusing, and so anything that clarifies how the
costs of long-term residential care are to be split between the
citizens and the state will help people with their retirement
"One of the unfortunate factors of living longer is the
increased likelihood of needing to pay for long-term care costs.
The State cannot afford to pay for this potentially huge bill alone
and if people have built up a certain amount in assets - especially
in their home - it is sensible to expect them to pay towards the
costs. But it is also sensible to cap how much people will have to
pay and what the Government decides to do next will be crucial.
"Equity release has always had a role to play here. In the first
instance, it often allows people to stay in their own homes for
longer and to pay for care there but it also has a major role to
play with paying for residential care costs too. If the Government
offers an endorsement of equity release we will see a significant
shift in the number of people looking for advice from independent
solicitors and advisers as to how equity release can form part of
their financial planning in retirement."
Editors notes:Independent online survey undertaken by
Wriglesworth Research in June 2011 among 1,105 UK nationally
representative consumers aged 18-84, 59% of which were
* Figures from charity Age UK using information from Laing &
Buisson. It found the average weekly residential care home cost in
2010/2011 was £504, or £26,208 a year.
** If taken as a measure of how big the market for equity
release is likely to grow, the ONS predicts that by 2035, 23% of
the population is projected to be aged 65 and over. The population
of the UK was at 62.3 million in 2010 and rising at the highest
annual growth rate since mid-1962. However, even if it maintained
this level, in 2035 there would still be 14.3 million people aged
over 65 in the UK.