10 March 2020

Government must tackle social care crisis

3 min read

Meera Khanna, Consumer PR Manager
Meera Khanna

Corporate PR Manager - Protection


Jennifer Gilchrist, protection specialist at Royal London responds to the Health and Social Care Committee launching an enquiry into the social care funding gap.

"It’s vital that the social care crisis is tackled urgently and a solution is found to prevent people being hit with care bills of tens of thousands of pounds. In extreme cases, people can be forced to sell their family home to pay for care. A ‘care pension’ could work alongside income drawdown by allowing people to pay for care insurance out of their retirement pot.

"To make this work, the government would need to make sure payments into such policies were tax-free, and would need to introduce an overall cap on lifetime care costs. With these changes, millions of people could start to build up protection against the risk of facing catastrophic care costs in later life."


Royal London is calling on the government to introduce policy changes which would enable the creation of a new at-retirement product which would combine existing income drawdown arrangements with insurance against future care costs.

Following the introduction of pension freedoms, growing numbers of people go into retirement with a pot of money from which they draw an income through retirement. A care insurance could be bolted on to these income drawdown arrangements, either in the form of a regular premium or a one-off lump sum. To make these products more attractive, Royal London suggests:

  • Favourable tax treatment on money taken out of income drawdown to pay for care insurance; if this money goes directly to an insurer and any payout from the policy goes straight to a care home, these withdrawals should be tax free;
  • An overall cap on people’s lifetime care bills, so that insurers are not taking on an open-ended liability and can therefore offer more attractive premium levels;

This product could be branded as ‘inheritance insurance’, as it could ensure that those who faced large care costs in later life were no longer at risk of having to sell a family home to meet care bills.

More information can be found in our policy paper Is it time for the care pension?

For further information please contact:

Meera Khanna, Corporate PR Manager - Protection

About Royal London:

Royal London is the largest mutual life insurance, pensions and investment company in the UK, with assets under management of £139 billion, 8.6 million policies in force and 4,348 employees. Figures quoted are as at 30 June 2020.