Melanie Bien: The outlook is gloomy for Britain's pensioners

Iris Davies and her family will be breathing a sigh of relief this weekend after the squatters who moved into the elderly widow's home in Bath finally decided to leave of their own accord.

Iris Davies and her family will be breathing a sigh of relief this weekend after the squatters who moved into the elderly widow's home in Bath finally decided to leave of their own accord.

Mrs Davies's nephew has been forking out £2,500 a month to cover her care home fees but now her £195,000 house can be sold to pay for the long-term care (LTC) she needs for the rest of her days.

What makes this story so disturbing is not so much the fact that if the squatters hadn't decided themselves to leave, it would have taken months to remove them through the courts. That is bad enough.

But what is really depressing is that Mrs Davies is just the latest in a long line of elderly people who are being forced to sell their family homes to meet their nursing home costs. Around 70,000 people every year have no choice but to do this, according to figures from the Liberal Democrats.

This is because your local authority won't help out with your fees if you have more than £20,000 in savings or assets, including the value of your home. You have to pay for LTC yourself, which is why most people find themselves selling up to raise the necessary cash.

The average life expectancy of an elderly person once they enter a care home is just two years. But given that the cost of a nursing or residential home is around £26,000 a year, based on figures from the Nursing Home Care Fees Association, it doesn't take long to eat away at the proceeds of a house sale.

This can have a devastating effect on the inheritance the elderly person was planning to leave to their nearest and dearest. And anyone who knows an elderly person or two will know how important it is to them to leave as much they can. Not being able to do so is extremely distressing.

However, if you need to pay for LTC, alternatives to selling your property are few and far between, and growing ever more so. For example, LTC insurance, a pre-funded policy taken out by working people to cover the possible cost of having to go into a care home in later life, is no longer available. Skandia, the only remaining major provider of this type of insurance, announced last week that it is pulling out of the market.

Bupa, which used to be one of the largest providers of LTC insurance, also stopped offering these policies last month. And Norwich Union, PPP Lifetime Care and Scottish Widows all pulled out of the LTC insurance market earlier this year.

These insurers have withdrawn their products because sales have plummeted in recent years. Just one in four people over the age of 65 eventually need LTC, according to independent researchers Laing & Buisson, and most of us hope that we will be among the lucky three, so won't have to worry about paying for a care home. Nobody likes to dwell on the possibility that they will become old and infirm.

Even for those who did investigate LTC cover, the hefty insurance premiums charged made the idea of taking out a policy even more offputting. There are so many other demands on our wallets that persuading people to pay for something that might never happen is an extremely hard sell.

However, the Care Funding Bureau blames the Government for providers' decision to pull out of the LTC insurance market, saying it is unwilling to educate voters on who has to pay for their care and who can receive it for free. Many people still believe that the Government will help out financially if they require care, although this isn't going to be the reality for most of us.

There are alternatives to selling your house to fund LTC. For example, just before you have to enter a care home, you could purchase an impaired life annuity or an immediate needs annuity, which ensures that all care fees are covered for the rest of the policyholder's life. But there isn't enough awareness about such policies, with many people believing that selling up is the only answer.

What is vital is that an education process is put in place to promote awareness of the choices available. And also to make people realise that if they don't save for later life, whether it is for their pension or to fund nursing-home care, retirement may be anything but a golden age.

m.bien@independent.co.uk

Independent Partners: 10 top tips for retirement. Get your free guide here

News
Russia Today’s new UK channel began broadcasting yesterday. Discussions so far have included why Britons see Russia as ‘the bad guy’
news

New UK station Russia Today gives a very bizarre view of Britain

News
people
Voices
Left: An illustration of the original Jim Crowe, played by TD Rice Right: A Couple dressed as Ray and Janay Rice
voices

By performing as African Americans or Indians, white people get to play act a kind of 'imaginary liberation', writes Michael Mark Cohen

Arts and Entertainment
Keira Knightley and Benedict Cumberbatch at the premiere of The Imitation Game at the BFI London Film Festival
filmsKeira Knightley tried to miss The Imitation Game premiere to watch Bake Off
PROMOTED VIDEO
News
i100
Life and Style
fashion
Arts and Entertainment
Hand out press photograph/film still from the movie Mad Max Fury Road (Downloaded from the Warner Bro's media site/Jasin Boland/© 2014 Warner Bros. Entertainment Inc.)
films'You have to try everything and it’s all a process of elimination, but ultimately you find your path'
Arts and Entertainment
Imelda Staunton as Dolores Umbridge in the Harry Potter films
books

New essay by JK Rowling went live on Pottermore site this morning

News
people

Top Gear presenter is no stranger to foot-in-mouth controversy

News
i100
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    The benefits of Recruitment at SThree...

    £18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

    Trainee Recruitment Consultants

    £20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

    Finance Assistant - Part time - 9 month FTC

    £20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...

    Marketing Manager

    £40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...

    Day In a Page

    The drugs revolution starts now as MPs agree its high time for change

    The drugs revolution starts now as MPs agree its high time for change

    Commons debate highlights growing cross-party consensus on softening UK drugs legislation, unchanged for 43 years
    The camera is turned on tabloid editors in Richard Peppiatt's 'One Rogue Reporter'

    Gotcha! The camera is turned on tabloid editors

    Hugh Grant says Richard Peppiatt's 'One Rogue Reporter' documentary will highlight issues raised by Leveson
    Fall of the Berlin Wall: It was thanks to Mikhail Gorbachev that this symbol of division fell

    Fall of the Berlin Wall

    It was thanks to Gorbachev that this symbol of division fell
    Halloween 2014: What makes Ouija boards, demon dolls, and evil clowns so frightening?

    What makes ouija boards and demon dolls scary?

    Ouija boards, demon dolls, evil children and clowns are all classic tropes of horror, and this year’s Halloween releases feature them all. What makes them so frightening, decade after decade?
    A safari in modern Britain: Rose Rouse reveals how her four-year tour of Harlesden taught her as much about the UK as it did about NW10

    Rose Rouse's safari in modern Britain

    Rouse decided to walk and talk with as many different people as possible in her neighbourhood of Harlesden and her experiences have been published in a new book
    Welcome to my world of no smell and odd tastes: How a bike accident left one woman living with unwanted food mash-ups

    'My world of no smell and odd tastes'

    A head injury from a bicycle accident had the surprising effect of robbing Nell Frizzell of two of her senses

    Matt Parker is proud of his square roots

    The "stand-up mathematician" is using comedy nights to preach maths to big audiences
    Paul Scholes column: Beating Manchester City is vital part of life at Manchester United. This is first major test for Luke Shaw, Angel Di Maria and Radamel Falcao – it’s not a game to lose

    Paul Scholes column

    Beating City is vital part of life at United. This is first major test for Shaw, Di Maria and Falcao – it’s not a game to lose
    Frank Warren: Call me an old git, but I just can't see that there's a place for women’s boxing

    Frank Warren column

    Call me an old git, but I just can't see that there's a place for women’s boxing
    Adrian Heath interview: Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room

    Adrian Heath's American dream...

    Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room
    Simon Hart: Manchester City will rise again but they need to change their attitude

    Manchester City will rise again but they need to change their attitude

    Manuel Pellegrini’s side are too good to fail and derby allows them to start again, says Simon Hart
    Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

    A Syrian general speaks

    A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities
    ‘A bit of a shock...’ Cambridge economist with Glasgow roots becomes Zambia’s acting President

    ‘A bit of a shock...’ Economist with Glasgow roots becomes Zambia’s acting President

    Guy Scott's predecessor, Michael Sata, died in a London hospital this week after a lengthy illness
    Fall of the Berlin Wall: History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War

    Fall of the Berlin Wall

    History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War
    How to turn your mobile phone into easy money

    Turn your mobile phone into easy money

    There are 90 million unused mobiles in the UK, which would be worth £7bn if we cashed them in, says David Crookes