Sir Steve Webb, former pensions minister, is pushing for a new form of care insurance to fund the social care needs of those "in the middle".
Speaking at the inaugural Later Life Adviser Conference in Gloucester, he said the product, tied to pension drawdown, would help those who “would benefit from a bit of pooling” and would be willing to pay a one-off premium out of their pension drawdown for an insurance product that would cover their social care costs in the future.
He said this would help those who were neither “at the bottom”, who are covered by the state, or “at the top” who would pay for their own care.
He also suggested if such a product could be developed that the marketing of it would be crucial.
He said: “We shouldn’t then market this as care insurance but ‘inheritance insurance.
“You could say to the client that this is a good option if you are care about your kids getting the family home. I am thinking about a £30,000 one-off premium out of the drawdown at retirement in order to know that your family is going to get your home.”
Sir Steve, who is now director of policy and external communications at Royal London Assurance, said the insurers “would give a damn”, arguing that “if the provider is on the hook for your care funding…then we would spend money on prevention, in order to stop you needing catastrophic care costs”.
He said the alternative might be to put extra money on National Insurance to pay for care, but suggested the government might spend the money immediately, as it wouldn’t be able to resist the extra revenues.
He said his suggestion of an “at-retirement payment seems fair” and, in this way, “we would not be asking 30-year-olds to fund their own care and ours”.
Webb suggested that if the individual concerned ended up not needing care, then they might receive some other benefit such as the payment of their funeral.
At the conference, Richard Graham, MP for Gloucester, also spoke on social care funding and how to pay for it.
He said: "I think there will undoubtedly be changes to taxation that comes out of the green paper.
"My own recommendation would be to use National Insurance to specifically fund care and that the money raised is a specific contribution to a health and care fund.
"The reality is that we are all going to have to pay more and by increasing NI payments to a specific health and care fund, you can do this separate to general taxation."
Mr Graham also said it was important that all stakeholders put “intergenerational fairness” at the heart of any changes.
He said: “While we discuss later life, there is another generation who are not having life as easy as it was for us in those heady days of youth.
