A Letter From The Founder: The Bit Nobody Tells You About Care And Pensions

Funding care in later life can affect your pension income. In this week’s founder’s letter, Antonia explains the impact on your retirement fund and how to navigate costs.

I’ve been asked this a lot lately, so let’s deal with it properly.

If you or your partner ever need to go into a care home, the local authority will do a financial assessment to work out how much you contribute. Most people know that your savings and property get looked at.

What catches people out is the income side, specifically, what happens to a pension when there’s a husband, wife, or partner still living at home.

Here’s the good news first. Your home is protected. If your partner goes into permanent care and you carry on living in the house you shared, that property is left out of the means test completely, for as long as you’re living there. The council cannot force a sale while you remain. This is a mandatory protection under the Care Act 2014, not something you have to fight for.

Now the part that’s less straightforward: income.

The local authority only assesses the income of the person going into care, not yours. So if you have your own pension, in your own name, that’s yours. It isn’t touched.

The problem comes when there’s only one pension between you, and it belongs to the person who’s gone into care. The council will leave that person with a small weekly amount to cover their personal needs, called a Personal Expenses Allowance, currently £30.65 a week, rising to £31.80 from April 2026. But that allowance is for the person in care.

It says nothing about what happens to the partner left at home who was relying on that same pension to pay the mortgage, the food shop, the heating.

Here’s what most people don’t know, and it’s the useful bit. There’s a specific rule, set out in the Care and Support (Charging and Assessment of Resources) Regulations 2014, that says if part of a pension is legally paid to a spouse or civil partner, that portion is left out of the means test entirely.

Many councils apply this as a straight 50% split: if the person in care arranges for half their workplace pension or personal pension to go to their spouse, the council disregards that half when working out what the resident contributes. It isn’t automatic. Someone has to set it up.

So if you’re in this situation, or think you might be one day, here’s what I’d actually do. Ask whether the pension provider can split payments so that part goes directly to the spouse at home. Raise it with the council during the financial assessment, in writing, rather than waiting to be told.

And if there’s any lead time at all before a care decision needs to be made, get financial advice specifically on pension income splitting, because this is exactly the kind of thing that’s much easier to sort out before a crisis than during one.

The system protects the roof over your head automatically, but it doesn’t automatically protect the income that pays for everything under that roof.

That protection exists, but you have to ask for it.

As ever, this isn’t personal financial advice, and care funding rules vary depending on where in the UK you live and your specific circumstances. If this applies to you or someone in your family, speak to a financial adviser who specialises in later life planning, or contact your local authority’s financial assessment team directly.

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Sources: gov.uk social care charging circular 2026 to 2027; Care Act 2014 and the Care and Support (Charging and Assessment of Resources) Regulations 2014 (Schedule 1); Age UK and Independent Age guidance on property disregards.