This is part three of our series on planning and paying for long-term social care. 

Part one dealt with the gap between genuine need and available State provision. 

Part two explained how the means test values your assets (including pension and property) and when it excludes them. 

Now we’ll consider what happens when you qualify for funding – and when you don’t…

Navigating the UK social care system is like being forced through a ramshackle Heath Robinson machine held together by elastic definitions and loopholes.

You’re propelled down different funding chutes in a process obscured by sooty clouds of subjectivity.

Depending on the outcome of your local authority1 financial assessment (the means test), you’ll end up in one of three buckets:

• Max funding
• Partial funding
• No funding

Even then, State funding only applies to your eligible care needs. Which may only bear some relation to the care you actually need. 

A financial assessment divides your assets into capital and income, as covered in our previous post.

(Reminder: the social care definitions of capital and income diverge significantly from their familiar meaning.)

Your capital is tested against one set of social care thresholds. Income is scored against another.

Your social care funding can be docked to zero on either count.

The system may produce odd results, depending on how your finances are structured. And even if you fail initially, you may run down your resources and qualify later.

Let’s now examine how the two-stage means test crunches the numbers.

Social care thresholds for capital: test one

Test one compares your capital against these thresholds:

Above the upper threshold – you’re in the ‘no funding’ bin. At least, that is, until your capital expenditure sinks your assets below the threshold. Or you hit the social care cap in England. We covered the pitfalls of the cap in part one.

Even if you’re above the threshold, you’re still eligible for universally available support. (This includes free personal care in Northern Ireland and Scotland.)

Wales also caps care at home costs for your eligible needs.

Below the lower threshold – you qualify for local authority funding. But your level of income can still reduce or entirely eliminate your funding entitlement. We cover that in the social care allowances section.

Between the thresholds – This is the twilight zone. You qualify for funding, but some of your capital also counts as income. This mechanism acts as an extra counterweight, forcing your funding down as your assets rise.

This extra skim from your between the thresholds capital is called tariff income. 

Tariff income between the thresholds

Tariff income is calculated differently across the home nations.

Wales

The single social care threshold means tariff income doesn’t exist here.  

England

Your capital between £14,250 and £23,250 increases your means-tested income figure.

Your income increases by £1 per week for every £250 of capital you have between the £14,250 and £23,250 thresholds.

If your capital amounts to £14,500 then your income total is increased by £1 per week.

If you have £23,250 of capital then your income is up-weighted by £36 per week. (£9,000 / £250 = £36).

Your income ratchets by £2 per week if you have £14,501 in capital. That’s because any remainder is counted as a fresh £250 block.

Tariff income will be applied the same way for the new social care thresholds from October 2023. (Assuming they come in as planned.)

Northern Ireland

The same tariff income formula applies for residential care as in England.

Care at home is free, so tariff income doesn’t apply in this case.

Scotland

Tariff income for residential care is calculated at the following rate:

Your income increases by £1 per week for every £250 of capital (or part of) you have between the £18,000 and £28,750 thresholds.

Tariff income for care at home is worked out differently:

Your income increases by £1 per week for every £500 of capital (or part of) you have over £10,000, if you’re above State Pension Age.

Your income increases by £1 per week for every £250 of capital (or part of) you have over £6,000, if you’re below State Pension Age.

There’s only one threshold here. This can catch out people who thought they were below the headline £18,000 threshold.

However, Scotland provides free personal care and nursing care for all. So the care at home means test applies only to chargeable services. Think housework and shopping (sometimes known as domestic assistance).

Intermission: get ready for the second test

Once tariff income is established according to your country’s rules, it is added to your other income to make the next part of the means test harder to pass.

Incidentally, the social care threshold table shows why it matters if your house falls into the means test.

Its value will catapult you beyond the upper thresholds. This immediately rules out local authority funding – unless and until you trigger any applicable social care cap.

Social care allowances for income: test two

Everyone must contribute something towards their eligible care needs, so long as they’re left with a minimal weekly income.

That’s true even if your capital falls below the lower social care threshold.

Your assessed income can wipe out any local authority funding you qualified for in stage one.

The level of weekly income that can’t be touched by fees is called the social care allowance. Here’s how much income you can keep:

This is the weekly income per individual that’s protected from social care fees.

The amount of local authority funding you receive is reduced by your remaining income above the relevant minimum that applies to you from the table. (For example, either £24.90 or £189 in England).

Apologies if you had to re-read that sentence twice to understand it. We didn’t write the rules!

Income outcome

The income contribution formula is:

• Calculate eligible income 
• Add tariff income if capital is over lower threshold
• Deduct weekly social care allowance
• Remainder = your contribution to care that would otherwise be funded by your local authority

So if you weren’t eliminated at the capital stage, this second test could hobble you.

You can easily imagine someone with pension income – but little else – seeing most of it disappear on care fees. Even though their eligible capital is below the lower social care threshold.

In England, that could leave you with £24.90 per week (£1,294.80 a year) to call your own.

You do get to keep any income that’s disregarded. That’s typically State benefits.

What about housing costs and inflation?

A ray of light is that some housing costs should be deducted from your income before it’s checked against the Minimum Income Guarantee.

The definition of housing costs differs per region, but includes:

• Council tax (after housing benefit or other reductions)
• Mortgage repayments (England) or mortgage interest (Scotland)
• Rent
• Ground rent (England)
• Water bills
• House insurance (Scotland)

There seems to be some discretion for local authorities to increase the Minimum Income Guarantee, particularly in Wales.2

Note, the Minimum Income Guarantee applies to care at home fees, not residential care.

Do the social care allowances rise with inflation? Well they’ve been frozen since 2015 in England. The link looks haphazard in the other home nations.

That’s a tax rise by any other name. But at least both allowances are due to rise in line with inflation in England from April 2022.

What if I run out of money?

You can re-apply for funding if your financial situation deteriorates.

You’ll need a new care assessment and financial assessment. You might now drop under the critical thresholds – especially if you’re funding your own care at home.

The social care guidance also mentions scenarios such as a large fall in the value of shares as a valid reason for reassessment.

If you’re facing a permanent move into residential care, consider a deferred payment agreement. This is designed to protect you from a forced sale of your home. (See our previous post on social care funding.)

Of course, fortunes can be restored as well as lost. An inheritance, for example, could cause you to bob back over the social care thresholds. You could then lose local authority funding.

Care bare

The social care system is so convoluted that it’s probably best expressed in pictures and not words. And when I say picture, I don’t mean Edvard Munch’s The Scream.

I mean a diagram.

Our flowchart below boils social care funding down to its bare essentials. Hopefully it’ll help untangle all the ifs, buts, and maybes.

Start from the ‘Individual seeks help’ button.

Are you negotiating the social care system right now? In that case I can recommend the guidance on Money Helper.

Age UK’s social care factsheets are also superb. Here’s its coverage per region:

• England (scroll to the social care section at the bottom)
• Northern Ireland
• Scotland
• Wales

Finally, a number of local authorities have online care cost calculators. These walk you through the means test steps I’ve covered in this post and the previous episode to estimate your social care fee contribution. 

Google: social care financial assessment calculator + your local authority’s name to find yours. 

Part four of the series shows how you can estimate a plausible cost of social care from available data.

You can then plug that number into your financial plans to stress test them against social care scenarios. 

Take it steady,

The Accumulator

1. Health and Social Care trust in Northern Ireland. [↩]
2. Both forms of social care allowance are called the Minimal Income Amount (MIA) in Wales. Unfortunate acronym, that. [↩]

What caught my eye this week.

When it comes to collateral damage from the tragedy in Ukraine, investors in Russia can only come near the bottom of the sympathy list.

But Monevator is an investing site. And the tumult in Russian assets since the war began is one for the ages.

Russia’s stock market was kept closed all week. But that didn’t save its key constituents from a furious reckoning of price discovery on foreign exchanges.

As war and its repercussions unfolded, Russian stocks were smashed.

Invasion-day alone saw the fifth-worse plunge of all-time for the Russian equity market, in local currency terms.

It only got worse from there.

From Russia with Love

As CNBC reports:

Russia’s London-listed stocks had lost almost all of their value by the time [their] suspension was announced on Thursday.

Sberbank was down 99.72% year-to-date to trade for around a single penny on Wednesday, while Gazprom was down 93.71%, Lukoil 99.2%, Polyus 95.58%, Rosneft 92.52% and EN+ 20.51%.

These are giant firms getting roiled.

True, their foreign-listed holdings might be being treated with especially extreme prejudice.

For newly-minted legal and regulatory reasons as well as – for want of better words – moral or PR ones, Russia is now untouchable for many investors.

Norway’s giant sovereign wealth fund has written-down its Russian holdings by more than 90%, for example. The manager warned: “it might be that they are essentially worthless at some point.”

Happen to have some Russian share certificates under your bed? I wouldn’t look forward to an overnight bounce when (if) Moscow reopens. Not unless this invasion ends very soon.

That’s because we’re seeing economic warfare on a Francis Ford Coppola scale.

Russia is on the fast-track to Pariah status. (And I’ll say it again: I feel sorry for ordinary powerless Russians getting ruined by a despot).

Casino Royale

Already owning companies based in a gangster’s paradise was one thing.

But what if you waited until this week before plunging into massively devalued Russian securities?

After all, a Russian Warren Buffett might say: “Bud’te zhadnymi, kogda drugiye boyatsya, i boytes’, kogda drugiye zhadnichayut.”

(Be greedy when others are fearful, courtesy of Google Translate).

Well I wouldn’t recommend betting on Putin’s autocratic nuclear-armed superpower with more than pin money. For economic reasons let alone moral ones.

Ethical squeamishness aside, you might argue owning a Russian ETF is ‘option money’ on Putin getting ousted. Preferably by someone more humanity-friendly.

Okay, but then there’s the problem that Russian ETFs went batshit crazy (a technical term) this week.

Live and Let Die

As reported in the Financial Times [search result]:

The $446mn VanEck Vectors Russia ETF (RSX) closed on Tuesday at $8.26, a 177 per cent premium to its net asset value of $2.98 a share.

Similarly the iShares MSCI Russia ADR/GDR Ucits ETF (CSRU) closed at $28, 59.7 per cent above its NAV of $17.53.

However, most Russia-focused ETFs have plunged to sharp discounts, with the $165mn iShares MSCI Russia ETF (ERUS) and iShares MSCI Eastern Europe Capped UCITS ETF (IEER) both closing at discounts of 50-60 per cent to NAV.

The fact the Russian market is closed isn’t as fatal to Russian ETF trading as you might imagine.

ETFs can still act as a means of price discovery during market dislocations.

We saw that in the bond market, for example, during the Covid crash.

High-yield ETFs apparently veered from their ‘known’ value when the market froze. But when it thawed they were roughly right about real underlying value.

However there are extra snags with Russian ETFs.

The FT continues:

…owing to the sanctions imposed on many Russian companies after the invasion of Ukraine, the closure of the Moscow stock exchange, capital controls and some ETF issuers’ unwillingness to increase their exposure to Russian securities, many Russia-focused ETFs have halted the creation process and sometimes also the redemption process, causing the arbitrage mechanism to break down.

Ouch.

I am not an expert on ETF plumbing but Dave Nadig is:

• Russia: how broken markets work with ETFs – ETF Trends

Skyfall

Wondering how quickly you can lose money when political risk goes 83.59% against you?

Here’s the London-listed iShares Russian ETF (ticket: CSRU) over the past month:

Grim by any stretch. But it’s actually even worse than this!

As per the iShares website, the last recorded NAV1 of CSRU was barely $7. It could be trading at more than three times what its assets are really worth.

The iShares site warns:

Effective March 3, 2022, the Fund has temporarily suspended new creations and redemptions of its shares until further notice […]

Effective March 4, 2022, secondary market trading in the shares of the Fund has been suspended by Deutsche Börse, Euronext and Borsa Italiana.

The Russian stock market was shut for 75 years following the Bolshevik revolution in 1917.

Fair warning to any ambitious long-term investors reading this.

The World is Not Enough

Active and hedge funds with big exposure to Russia have faced all kinds of damage, obviously.

There have been suspensions, too. Here your money is locked into a fund for an unknown period. Outfits as diverse as BNP Paribas to the UK’s Liontrust have suspended trading in Russian funds.

The vast majority of passive investors haven’t done too badly. Emerging market index funds had less than 5% in Russia when this all got going.

Of course losing an entire country overnight is still a nasty hit. And given that MSCI and Dow Jones are now pulling ‘uninvestable’ Russian stocks from their indices, holders of passive funds tracking such indices probably can’t expect a bounce from Russian stocks from any future recovery.

Incidentally, I’ve noted the Freedom Emerging Markets ETF before in Weekend Reading. This ETF tracks an alternative emerging markets index. It screens out the likes of Russia and China.

Unfortunately it’s a US-only product. Maybe that will change now?

As Humble Dollar wrote this week, going without autocrats needn’t be bad for your wealth:

Since inception in May 2019 through February, the fund is up 39%, outperforming Vanguard’s emerging markets index fund, which is up 30%, and iShares Core MSCI Emerging Markets Index Fund (IEMG), up 29%, and it’s even further ahead of the big fundamental-weighted funds mentioned above.

Quantum of Solace

As an active investor I had no exposure to Russia, fortunately, when Putin decided to do the worst retcon in recent history.

However plenty of other stocks have been smashed. Some European banks are down more than 25% on Russian exposure fears. We’ve all taken our lumps I’m sure.

And any of it pales into insignificance compared to Russian missiles raining down on your city. Let alone aggressive taunts concerning nuclear weapons.

Have a safe weekend wherever you are.

[continue reading…]

1. Net Asset Value [↩]

Welcome to part two of our series on how to plan and pay for long-term social care in later life. 

Part one covered why most people will pay some, or all, of their care fees. We also explained why England’s new social care cap doesn’t stop steep bills. 

Today we’ll see how the social care means test applies to your assets.

The first step to getting help with social care funding is to ask your local authority1 for a care needs assessment.2 This determines your eligible care needs.

Your local authority is obligated to fund, at least partially, your eligible care needs – if you qualify for financial help.

That’s a big if.

Notice I’ve highlighted the word ‘eligible’. Why? Because any social care funding you do receive only goes towards care that your local authority deems necessary.

What if you or a loved one needs help with washing, or dressing, or preparing meals, but your local authority doesn’t agree? Then that care must be self-funded, organised some other way, or done without.

Paying for ineligible care doesn’t count towards your social care cap either.

The gap between genuine needs and official provision explains why some are forced to choose between large bills or being unsupported.

The social care means test

No matter how healthy your finances look today, the risk of being sucked into a financial black hole later in life makes it worth knowing how the system works.

Most long-term social care services are means-tested.

The means test is officially known as a financial assessment. It’s undertaken by your local authority. The test should follow your care assessment if you got an ‘eligible needs’ verdict.

Your financial resources are divided into capital and income for the purpose of the means test.

(Note that social care defines those terms quite differently from their common meanings.)

To gain social care funding, your capital and income totals must both fall below certain thresholds.

Some assets don’t necessarily count towards the means test. Your home is likely to be your most important asset that’s sometimes excluded.

The rest of this post explains which assets count as capital, which as income, and when they’re excluded. (Or disregarded in the jargon.)

In part three we’ll explain how your capital and income determine your funding fate, when pitted against the social care thresholds.

So what does capital and income actually mean in the convoluted world of social care?

Social care funding: capital

Your means-tested capital includes:

• Cash stored in bank or building society accounts, ISAs, and National Savings Certificates
• Investments in stocks and shares ISAs and general investment accounts. (i.e. not in pensions)
• Property – your home is exempt in certain scenarios. (See the home section below)
• Premium Bonds
• Trusts – sometimes exempt, sometimes not – seek advice
• Business assets
• Land

Pensions rarely count as capital except for a few exceptions. We’ll cover those in the pensions section below.

Debts secured against an asset are deducted from its value. Ten per cent is docked from an asset’s value if selling it incurs significant fees. 

Disregarded capital

‘Disregarded’ capital is not included in the financial assessment. Capital not counted includes:

• The value of your main or only home if:

(1) Your partner or a dependent family member lives there. (Your live-in carer may also count). 

(2) You need care at home, not residential care.

• Personal possessions
• The surrender value of life insurance policies
• Investment bonds with a life assurance element (as bought from life insurance companies). A local authority may count these assets if they believe you bought them to avoid care fees
• Personal injury payments held in trust or administered by a court
• Trust money – depending on how the vehicle is structured

Social care funding: income

Your means-tested income includes:

• Private / workplace pensions (exceptions below)
• State pension
• Annuities
• Employed / self-employed income (in Northern Ireland and Scotland)
• Rental income
• Investment bond withdrawals
• Trust income
• Most benefits (some exceptions)

Your income should be calculated after tax.

Disregarded income

Some income is disregarded completely, some only partially:

• Earnings from employment or self-employment (England and Wales only)
• Pensions in some cases – see pensions section
• Interest from savings (where this is assessed as capital instead)
• Disability Living Allowance or Personal Independence Payment mobility components (but not care or daily living components)
• Attendance Allowance
• Pension Credit Savings Credit
• Income in kind (i.e. payments other than in money)
• Winter fuel payments
• War Pension Scheme payments except Constant Attendance Allowance
• State Pension Christmas Bonus
• Personal injury trust payments
• Child Tax Credit, Child Benefit, or Guardian’s Allowance
• War widow’s and widower’s special payments

Capital and income notes

Your assets should be classified as capital or income but not both. For example, money moved from your pension into an ISA will typically be treated as capital instead of income. It shouldn’t be double-counted.

Your local authority must assess you as an individual. Resources that belong solely to you don’t count towards your partner or spouse’s means test.

Joint assets like bank accounts or property are split 50/50 unless you can show evidence of an unequal share.

The shared finances of unmarried couples are treated differently. (Usually worse than their legally bound counterparts.)

Deprivation of assets

If the local authority thinks you’ve arranged your financial affairs to deliberately avoid care fees, it can invoke the deprivation of assets rules.

That enables it to count assets you’ve transferred to someone else, or otherwise disposed of, as if you still own them. 

Such assets are known as notional capital and notional income. Those figures are added to your running capital and income totals. 

Your local authority can’t just assume you’re fiddling the books. It must show that avoiding care fees was a significant factor in your decision to dispose of the assets under investigation. 

There is no time limit preventing past disposals being viewed as ‘deprivation of assets’, however. For example the Inheritance Tax gifting rules do not apply. 

But a ‘deprivation of assets’ claim can’t stand if you were healthy at the time of disposal and couldn’t have foreseen a need for care. 

Timing and previous patterns of gifting count as evidence. 

• Spending savings on a once-in-a-lifetime cruise shortly before your means test wouldn’t look good. 
• Neither would converting assets into a display case of antiques that you claim as personal possessions. 
• Nor treating the family to new cars, or a house ‘sold’ at a fraction of its real value. 

Local authorities can seek debt recovery from you and even third-party beneficiaries of your assets (e.g. family members). They can do this if they believe you’ve underpaid care fees in a case of deliberate deprivation. 

You can challenge a deprivation of assets decision via your local authority’s complaints procedure. 

You must be allowed to submit evidence to substantiate your version of events. 

Finally, even failing to claim State benefits can count as deprivation of assets. 

Check your benefits eligibility using this tool from Age UK. 

When does your home count towards the social care means test?

Your home only counts towards the social care means test if you or your partner require permanent residential care. Even then, your home is disregarded if it’s occupied by any of the following:

• You
• Your partner / spouse
• A family member who is over age 60 or is incapacitated
• A child you’re responsible for

The definitions of family member, occupied, and incapacitated are precise. But they’re also quite wide-ranging, including grandchildren, step-, adoptive- and in-law relationships.

The family member concerned must have been living in the property before you went into residential care.

It’s also possible for a local authority to disregard your home if your long-term carer gave up their home to look after you. Your carer needn’t be related.

If you and your partner both go into residential care then your home is means-tested. This could entail losing existing funding because your property is no longer disregarded.

Ownership

The value of the house is automatically split 50/50 where you and your partner own it as joint tenants. (Joint owners with a survivorship clause in Scotland).

You can divide ownership in any proportion as tenants in common. (Joint owners in Scotland).

Some solicitors tout a tenancy in common as a method of reducing care home fees.

For example, one partner’s share could be put into a trust controlled by their children. When that partner dies, legal ownership passes to the children. Meanwhile the trust apparently protects the right of the surviving partner to continue living in their own home.

If the surviving partner later goes into residential care, then only their share of the home should count towards fees. That’s assuming everything works as advertised.

A brief look into this arrangement suggests it’s fraught with risk for the surviving partner when their interest conflicts with the children. It could also fall foul of the deprivation of assets rules.

Valuation

If your property is included in the means test then it’s assessed at its present market value:

• Minus any mortgage or other loan secured upon it. This can have consequences for equity release.
• Minus 10% of the value to cover selling expenses.

Precise valuation isn’t necessary if you and the local authority agree your home’s value pushes you comfortably over the upper social care threshold.

Once the property is sold, your situation is assessed based on the actual proceeds you have left.

Equity release

Equity release schemes reduce the amount your home contributes to your means-tested capital. But note this only comes into play when your property is no longer disregarded.

Meanwhile, equity release can lead to complications such as:

• Adversely affecting your social care funding because the payouts increase your capital (lump sums) or income (regular payments).
• Reducing your means-tested benefits.
• Blocking your ability to pay for residential care via a deferred payment agreement (see below).
• Penalising you for moving home, or living with a new partner.

Equity release schemes trigger the sale of the home when the last of the joint-applicants moves into residential care. That makes these schemes ill-suited to funding residential care.

Downsizing is a simpler form of equity release.

Note your share of the released capital becomes eligible for means-testing if your partner downsizes while you’re in residential care.

The 12-week property disregard

The local authority should disregard your home from your financial assessment for the first 12-weeks after you permanently move into residential care. This applies if the remainder of your capital falls below the upper threshold.

This disregard means the local authority is liable for more of your care home fees until you can sell your property, or agree a deferred payment agreement.

In Scotland, the 12-week property disregard is more flexible. It can apply regardless of thresholds, and also to temporary care home stays. 

Deferred payment agreement

A deferred payment agreement protects you from being forced to sell your house in your lifetime to pay for permanent residential care. 

This option enables you to defer care home fees when:

• Your house is means-tested
• You can’t or don’t want to sell it
• There are limited other means at your disposal to pay the fees
• You can’t pay all your fees from your income
• The remainder of your capital (not including your share of the home) falls below these thresholds:

– England and Northern Ireland: £23,250

– Scotland: £18,000

– Wales: £50,000

Signing up for a deferred payment agreement effectively means your local authority loans you the money to pay residential care fees. Your home acts as security for the loan.

The loan is repaid when you sell your home, pay some other way, or you pay out of your estate after death.

You can rent out your property and use the money to pay some of your fees or loan. Some councils may even supply tenants.

Your local authority can charge administration costs and interest on your loan.

Check that any existing loans secured on your home – such as mortgage or equity release – don’t preclude a deferred payment agreement.

Why not just sell your home instead and use the proceeds to pay your fees, then invest or save the rest?

Apart from tax implications, a deferred payment agreement lets you benefit if your home rises in value. Of course, that bet can go the other way too.

Local authorities must also consider requests to use deferred payment agreements to top-up your care.

In other words, it can be used for ineligible needs that aren’t covered by your official care plan.

Your local authority uses your available house equity to decide if your request is sustainable over time.

You can also request a deferred payment agreement if your other capital assets are slightly over the threshold and not easily accessible.

Pension exceptions

Private and workplace pensions are normally classified as income. However, pensions can count as capital, or be disregarded altogether.

Firstly, 50% of your private/workplace pension or retirement annuity is disregarded if:

• You need residential care
• The money is paid to a spouse or civil partner
• They do not live in the same care home

This disregard doesn’t apply if you share less than 50% of your pension income. It can also affect your partner’s means-tested benefits.

Investments left untouched in a defined contribution pension pot are disregarded if you’re below State Pension Age. This does not count as deprivation of assets.

If you take your pension as a regular income then it counts as… wait for it… income. Defined benefit pensions and annuities are treated the same way.

But pension amounts taken as an occasional lump sum should be classified according to the product the assets land in.

Likely depots such as bank accounts, stocks and shares ISAs, and property all count as capital.

Note: it’s not crystal clear when an occasional pension lump sum counts as capital and when it counts as income. It could be treated either way but it can’t be treated as both. The defining factor is regularity. Therefore monthly withdrawals can be assumed to fall in the income camp. 

Drawing on your pension

Once you reach State Pension Age, the local authority can treat you as taking your private pension – whether or not you actually do so.

If you don’t take a pension income then the local authority can estimate a notional income as if you bought a lifetime annuity with your pot.

This annuity income estimate can come from your pension provider or the Government Actuary’s Department.

Your local authority can also count the annuity rate if they decide you’re drawing down too slowly.

In this case, they must disregard your actual pension income to avoid double counting.

An annuity estimate could well imply a higher income than you actually drawdown using a prudent withdrawal rate. This would penalise you for conserving your portfolio. We’ll dig into this later in the series. 

If you drawdown faster than the annuity rate then they’ll just use your actual pension income.

Mean test

Once the local authority calculates your total capital and income the next step is to see if you qualify for social care funding. Here the relevant thresholds and minimum income allowances come into play.

Those are not easy tests to pass but the idiosyncrasies of the system can throw up surprising results. We’ll cover that in part 3 on social care thresholds. 

Take it steady,

The Accumulator

1. Contact your Health and Social Care Trust in Northern Ireland. [↩]
2. Contact the adult social services department. [↩]