We discuss how it may have been an opportunity missed for the government to assist pensioners with their current income shortfalls.
The Chancellor did not use this week’s Budget to address one issue involving both the retirement and housing sectors which could help improve pensioners’ prospects in retirement.
One asset pensioners have that can assist their income is the elderly persons home. It was therefore disappointing that one anomaly closely related to both the retirement and housing sectors remains ignored.
This where equity release can assist.
Some of the latest Budget went some way to improving pensioners retirement, such as raising the savings limit for pension credit and increasing the state pension despite negative RPI inflation.
A further note regarding how the stimulus & assistance of equity release can help the economy is by the usage of the funds released. One of the main reasons for releasing capital is home improvements & how better to aid local tradesmen who can benefit from the elderly having the equity release funds spent & using their expertise?
One method of improving the financial circumstances of some retired homeowners would be to make cash releases under regulated equity release schemes outside the scope of income support and pension credit checks.
As the home itself is excluded when assessing eligibility to pension credit, the savings element which is derived from equity release schemes are designed to enable pensioners to remain in the same home.
Means testing on this basis discourages the elderly from improving their standard of living, a consequence of a rigid interpretation of the rules. The Treasury have clearly not yet recognised that equity release plans are an effective method of improving pension provision at negligible cost to the taxpayer.
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