Maximising the benefit of 'free' OAP care; podium

In a blaze of publicity, free personal and nursing care for pensioners in Scotland was launched at the start of this month. Yet, while MSPs have heralded the introduction of fresh support for older people as the dawning of a new era, many commentators are asking if the new legislation will offer any real advantages to those pensioners who fund care fees from their savings.

The Scottish parliament's provision of care for the elderly has been seen as one of its most radical departures from UK government policy. But, despite claims that it will protect the savings of older people, closer examination suggests many will be little better off. The new regulations provide additional support for those, aged 65 years and over, who must meet the costs of residential and nursing home care because they have savings or assets of more than (pounds) 18,500. Theoretically, they will receive (pounds) 145 a week towards residential home fees and (pounds) 210 towards the costs of staying in a nursing home.

However, the residents will lose their attendance allowance, which until now has been (pounds) 56.25 a week, or (pounds) 37.65 for those entitled only to the lower rate. This means they will benefit by only (pounds) 89 or (pounds) 154 a week. So, while the new supplement will go some way to preserving the savings of those who pay fees at a starting level of around (pounds) 350 per week, the impact is far less at the average cost of (pounds) 515 per week. It becomes a mere drop in the ocean at the top end of the market, where charges can be as much as (pounds) 900 per week.

Against this backdrop, many fear residential and nursing homes will seek to recover their own levels of profitability by raising fees. This could result in the quicker depletion of savings which have been carefully built up through years of prudent financial management, leaving nothing to pass on to the next generation. So, can older people act to preserve their assets?

When this issue first came to the fore many took the bold step of transferring their homes - their main assets - to the next generation, hoping it would not be taken into account during any later assessment of their eligibility for financial support. But, as some predicted at the time, this has not been a successful move. The courts have taken a hard line in cases where property appears to have been transferred to avoid residential care charges. In particular, they have sought to overcome difficulties connected with recovering care charges by accepting that means assessment can be carried out when placing individuals in care homes. As a result, elderly people can be left in hospital or other accommodation despite a general agreement that they do need care, simply because they should pay fees but cannot.

While the options are limited, and proper advice should always be sought, there are still some ways to safeguard savings. When the house is in joint ownership, a will can ensure that the surviving spouse will inherit only a right of occupancy. This means that half the value of the property is ruled out of care assessments and can be left to the couple's family. Meanwhile, in cases where children have helped parents buy their former council houses at a discount, it makes sense to secure their loan over the property rather than gift it to them after the clawback period. This at least ensures return on the investment.

Alternatively, where a pensioner's income is greater than his or her needs, specialised insurance packages are available to pay for future care charges and also produce returns for those not requiring care.

Ultimately, solace can be found in the statistics. Only a relatively small proportion of us - around 6% of people between 75 years and 85 years - actually end our days in a home. There may be plenty of opportunity still to enjoy our savings.

Fiona Marshall is a solicitor with commercial law firm Shepherd and Wedderburn, specialising in taxesand trusts

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