Equity release to ‘top up’ state pension changes
Changes to the state pension will leave 30,000 women approaching retirement ‘out of pocket’ according to Age UK.
The new single-tier state pension is set to be implemented as of 6th April 2016 under The Pensions Bill and will stop people from inheriting their spouse’s pension.
As a result 40,000 people will suffer a financial shortfall in their expected retirement income, three quarters of which are understood to be women.
Caroline Abrahams is the Charity Director at Age UK. She believes if the changes are in the interest of fairness then the government needs to reconsiders its plans:
"The aim of this reform is to introduce a fairer state pension yet it cannot be fair to change the rules without giving people enough time to also change their retirement plans.
"Many of those affected will have made life choices and planned their retirement finances carefully with their partner only to find them in disarray if there is insufficient transitional protection in place.
"We are urging the Government to correct this injustice so tens of thousands of women can receive the pension they expected, giving them precious financial security in later life."
However should the plan remain unchanged homeowners can turn to equity release to make up for any pension shortcomings. Richard Espley, Head of Equity Release at Goldsmith Williams, explains:
“Many homeowners have already been using equity release to account for losses incurred from their private pension. However these proposed changes to the state pension could see more homeowners need to tap into some of the value tied up in their property to ease their retirement finances. Equity release allows a homeowner to do exactly that whilst retaining the right to live there.”
Content correct at time of publication