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Savings call to ease 'care crisis'
The Government should introduce a personal savings scheme to fund people's care in later life and help tackle the looming "care crisis", the director-general of Saga said.
Ros Altmann has written to Chancellor George Osborne ahead of his Autumn Statement, urging him to do more to help savers of all ages, including offering better incentives to people saving for a house deposit and planning for retirement.
She suggested that the Government should introduce a new lifetime Care Savings Allowance to encourage tax-free savings towards care of up to £30,000. This could be used by savers to pay for their own care or that of their relatives, so that families can save for each other's care if they wish to, she said.
Dr Altmann said: "We are heading towards a care crisis. With an ageing population, it is essential that people save for care they may need in later life. The Government needs to encourage people to address this issue, with incentives for them to save and invest so that they will be able to pay for adequate care."
The Government introduced a landmark scheme last month which will eventually see up to 10 million people automatically enrolled into workplace pensions to help tackle concerns that people are not putting enough money aside for their later years.
However, analysts have warned that many people will need to consider saving more than just the minimum contributions if they want to live comfortably in their old age.
Dr Altmann also called for tax-free cash Isa limits to be increased to help struggling savers. Current Isa rules allow half of the annual £11,280 allowance to be put into cash Isas, while the other half must go into stocks and shares.
She said: "Isas are the best option for tax-free savings, outside a pension. However, it makes no sense to force savers to gamble on stocks, if they can't afford to take losses."
Savings rates have been hammered by record low interest rates, and the potential returns on people's cash pots are plunging even further following the introduction of an £80 billion Government scheme in August to kick-start lending.
Analysts have said that the scheme, which gives lenders access to cheap finance to help borrowers, has made lenders less reliant on the need to attract savers' deposits and some providers have withdrawn deals entirely.