This article prompts an interesting discussion into the funding of care.
If the government were to allow the withdrawal of funds from personal pension pots to be paid directly to care homes, and to allow those withdrawals to be tax free, would it encourage more people to save for their retire AND for funding long term care needs?
Similar benefits are available with immediate needs annuities, but a widespread change like this could begin the process of helping this generation and the next fund their long term care.
It seems logical that this treatment would extend to money that is withdrawn earlier in retirement and used to purchase long-term care insurance, but this was not spelt out. As contributions to pensions come from pre-tax income (and as employees are not taxed upfront in respect of employer contributions), this would mean that money earned, saved in a pension and ultimately used to pay for long-term care would not be subject to income tax at any point.