The government is considering setting up a new auto-enrolment scheme, to enable workers to save towards care costs.
The proposals are expected to be contained in a forthcoming green paper from the Department of Health and Social Care, according to media reports.
It is understood money would be automatically deducted from people’s salary and invested in a national fund to cover care costs in later life. As with auto-enrolment individuals would be able to opt out.
Auto-enrolment, which was introduced in 2012, has seen a large increase in the number of employees savings for a pension, although there has been criticism that minimum contribution levels need to be raised.
Health and Social Care Secretary Matt Hancock says: “I’m attracted to the model of auto-enrolment, which has been so successful in pensions.
“If you make it the norm, tell people what it is they have to do to look after themselves it is often the case that vary few people will opt out.”
He says this would remove the “injustice” of older people being forced to use savings and other assets to pay for care at a later stage.
In recent years numerous changes have been proposed to change the way social care is funded, but this is the first time that a workplace-based solution has been put forward.
Pensions campaigner Ros Altmann (pictured) says she remains “baffled” as to how these proposals will help the immediate funding needs in this sector.
She says: “Auto-enrolment success has depended on employers organising everything, but the biggest care requirements in coming years will be for those already retired.
“However, contributions to a national fund for social care would be a major step forward in addressing the stark, unsustainable unfairnesses of our current system and may be part of a long-term solution for younger generations.”
Aegon’s pension director Steven Cameron says he “looked forward” to heading more about such plans. But he added that a more radical solution may be needed. “Neat and small eye-catching ideas don’t work for me. Social care funding needs to be the priority.”
While this proposal suggests widening the scope of AE to include social care funding, in a separate report, the Home Secretary Sajid Javid suggests that pensions auto-enrolment could be scrapped if there was no deal on Brexit, in order help businesses.
He claimed this could be part of a “shock and awe strategy” to ease the burden on smaller business in the event of more significant economic upheaval.
