The public is unaware of how much long-term care (LTC) actually costs with half the population believing it is free at the point of use, new research has found.
Those people expecting to fund their care needs with a pension are likely to face a huge annual deficit as average pension pots provide less than half the average cost of a year in a residential home.
A Chartered Insurance Institute (CII) report noted the results were particularly concerning given the recent publicity of the Dilnot Commission's findings suggesting a public-private hybrid model should be created.
However, perhaps encouragingly for the financial services sector, over 50% of MPs preferred a partnership model similar to that proposed by the Dilnot Commission.
It revealed that 80% have no idea of how much they will have to pay for care while 50% think long-term care is free at the point of use.
The current average LTC bill is £26,000 per year with the average length of stay in a care home being two years, creating an average care bill of £52,000.
However, the current average pension provides an income of only £10,000 per year, leaving a huge annual deficit.
And there does not appear to be significant will for greater state involvement as only one in ten MPs said they support long-term care being fully funded by the state.
David Thomson, director of policy and public affairs at the CII, said: "There is clearly a massive disconnect between public perception and reality.
"Eight in ten (80%) have no idea of how much their long-term care will cost and consequently are unlikely to be making any provision to meet that cost.
"Even more worrying is that 50% of the public think long-term care is entirely free at the point of use - the reality is starkly different," he added.
Thomson acknowledged that MPs have very little appetite for a fully funded state model, but they were more encouraged by the Dilnot proposals.
"Yet even with a model as outlined by Dilnot, the funding deficit still remains significant, meaning people will have to consider using capital tied up in non-pension assets such as property," he continued.
Thomson concluded by increasing public awareness and reinforcing public confidence in LTC products and added that there needs to be rigorous debate of the proposals set out by Dilnot.
