The current weekly state pension for single people, effective from April 2008, equates to £4,716.40 over a year. However, with current levels of pensioner inflation at 8.7% – this pension will have eroded in value to £4,306.07 by the end of the March 2009, a difference of £410.33. Assuming uniform inflation over this period, the reduction in real value to the pensioner is £205.17.
It is unlikely the additional £4.55 per week pensioners will get from the state pension from April 2009 will do much to alleviate the financial difficulties they face but there is one solution – equity release. A single 75 year old woman with a £300,000 property could release up to £900 each month (£10,800 a year), a 229% increase in income from the current annual state pension of £4,716.40.
Andrea Rozario, Director General of SHIP commented: “The Government has offered too little, too late to pensioners in this year’s pre budget report. A £60 bonus paid in January barely covers a third of what will have been eroded from their pensions over the tax year by inflation. The additional £4.55 a week for single pensioners is almost an insult and much more needs to be done to help the 2.1million** pensioners living in poverty.
“One solution for those pensioners needing to boost their income is equity release. The over 60’s can release some of the wealth tied up in their property and increase their retirement income substantially should they wish. We urge the Government to work with us in promoting this as a very real alternative to poverty for pensioners.”
