Now one in four pensioners who pay for their own care face losing their home and savings

As many as 40,000 who self-fund their care must fall back on local councils.

Ministers say Treasury cannot afford to support the elderly.

Around 170,000 of the 419,000 residents of care homes are self-funded.

The elderly must fund themselves if they have more than £23,250 in assets.

Survey finds 25% of those who self-fund care end up relying on the state.

A quarter of pensioners paying for residential care will end up losing their home and almost all their savings, a report warned yesterday.

As many as 40,000 people who fund their own fees will see their assets so depleted they will have to fall back on the mercy of their local council.

Many of them will face the trauma of being moved to a lower-quality home. Care firms may even pressure children to find cash so their parents can stay in the home they feel familiar in.

The vulnerable may also be told to move into a smaller room or share.

The findings, by the Local Government Information Unit, lay bare the scandal of elderly people who have saved all their lives losing almost everything at the very end, and leaving them little to pass on to their children.

Experts warn that the ageing population, coupled with council cuts, mean the number of people losing everything will increase – unless the Coalition caps the amount individuals need to contribute to their own care.

Ros Altmann, of over-50s group Saga, said: 'It is outrageous that we are in a position, in our advanced economy, where we can't say to someone that – no matter how much you have paid, no matter how much you have saved – we can guarantee you will be able to stay in the same place to get the care you need.'

A year in a home costs an average of £27,000. Self-funders typically spend four years in residential care, with 12 per cent staying there for eight years. 

The elderly must fund the full cost if they have more than £23,250 in assets – including the value of their home. 

A council will step in to help pay only when assets fall to the £23,250 level. At £14,000, it will fund the full costs. 

Ministers say that although they agree in principle with the idea of a cap, proposed last year by economist Andrew Dilnot, there isn't enough money in Treasury coffers to fund the £1.7billion annual cost. 

Jonathan Carr-West, of the LGIU, said: 'It is not a good situation to be in when you run out of cash, you have nothing to leave to your family, and you end up in a situation where the council – and not you – are making decisions on your care. 

You could find you've depleted your assets and suddenly you are living somewhere else. If you run out of money you will not necessarily be able to stay in your home.' 

Chris Horlick, of insurance firm Partnership, which worked on the report with the LGIU, said the huge costs are alarming for lifelong savers. 'They've lost everything – everything they've worked for,' he said.

Ultimately they lose their dignity, they lose any choice over where they can live. This is a devastating position for anyone to be in.'

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