It seems odd to talk about any crisis other than Covid right now, but here goes.

The social care emergency within the UK has been bubbling under the surface for a very long time. An eruption had become due any minute unless something changed drastically.

In essence, we were contemplating a whole generation of older people who faced financial ruin at the worst possible time — when they needed to pay for their own care or that of a loved one.

The outlook for social care was a disaster, and a disgrace, and the country was sleepwalking towards it.

Although just a start in improving social care, this reform could be good news for our industry

However, the government has claimed it will be the first to truly tackle this problem; and, it proudly asserted upon its recent policy launch, it will make sure our elderly citizens no longer face “catastrophic” costs for care.

A good start

The social care reform has, at its root, a simple principle: nobody in England will pay more than £86,000 for the care they need to complete their day-to-day living. Things such as assistance with cleaning, washing clothes, dressing and eating will all come under the new capped system.

This all sounds like a good start, right? Well, yes, I think it is a positive step on the road to solving a problem that has been left alone to worsen for far too long. However, on closer inspection I feel there’s still work to be done.

Will people no longer seek to use their property wealth to fund their later life — care or no care?

For starters, hiking National Insurance may not be the best way to fund this change, especially when so many working people have struggled so much already in the pandemic. Second, when the cap itself is picked apart, there seem to be many scenarios where individuals will have to pay far more than the supposed limit, especially given that necessary costs such as accommodation and meals will not be included.

Regardless, I think a change was needed. We could no longer stride headfirst into an enormous care crisis, so this is a start.

But what will it mean for equity release? Will people no longer seek to use their property wealth to fund their later life — care or no care? I doubt it. In fact, I think this reform could be more good news for our industry.

We could see even more individuals looking to their housing wealth as a route to the retirement they desire

Saving pensioners money on their care (because, regardless of the intricacies of the cap, many people will be saving money) means they can have some sense of relaxation. After many decades in work, older citizens should not have to worry about the cost of care eroding their dream retirement.

Renewed hope

As for our business, I feel confident the new social care policy will inspire more older people to explore the means of doing something — such as taking a special holiday or carrying out home improvements — that they had previously put off for fear of potential care costs wiping them out. Retirees, hopefully, will once again start thinking about the retirement they deserve, rather than the one they fear.

Supporting its citizens financially with things such as care is a smart move by the government; a move you could argue is the required role of any government. Essentially, this care cap could become a safety net for millions of retirees.

Lighter burden

Ultimately, our industry will continue to be an essential consideration for many. Of course, it will remain a consideration that should be embarked upon only after expert advice has been sought and options reviewed thoroughly. But removing the burden — or some of the burden, at least — of care costs will surely give more people the freedom to explore alternatives for retirement finance — equity release being one of many.

The new social care policy will inspire more older people to explore the means of doing something they had previously put off

The lifetime mortgage is already helping those aged from 55 to 105, and I think with this change in social care we could see even more individuals looking to their housing wealth — something most retirees will have amassed — as a route to the retirement they desire.

Andrea Rozario is chief corporate officer of Bower