State pension allowance: Will you get the full whack?

Published: 10/11/2014

From April 2016 a flat rate State Pension of £155 will launch. In order to receive this full amount you will need to have had made at least 35 years of National Insurance contributions. However nearly a fifth of adults believe they will fall short of this requirement.

According to new research by Prudential, 21 per cent of women and 14 per cent of men do not believe they will be entitled to the full State Pension allowance. The main reasons for this include taking lengthy career breaks to raise children or being unable to work due to long term illness.

There are ways in which people can make up any deficit: additional years can be bought in voluntary contributions and credited to those who receive Jobseeker’s Allowance or Employment and Support Allowance as well as people who claim children benefit for children under 12, those unable to work through illness and carers.

However, if there is still a financial discrepancy between your required retirement income and what you actually have coming in, equity release could offer a solution. Richard Espley explains:

“The changes to the State Pension are designed to make it easier for people to work out what they will receive in retirement. So if after doing these calculations, adding in any personal pension contributions and/or savings, there is still a gap then equity release could help you bridge it.

“Equity release allows a homeowner to unlock some of the value of their home, in either a one off lump sum or in smaller, more regular payouts. The amount released, along with the interest accrued is then repaid when the homeowner passes away or goes into long term residential care. You do not have to move and you remain the owner of the property; equity release simply allows you to utilise your largest financial asset at a time when you, or your loved ones, most need it.”