Perhaps one of the very few almost positive things to come out of the Pre-Budget Report was the April 2010 state pension rise which sees an increase of 2.5% in the rate from £95.25 to £97.65 for a single pensioner and from £152.30 to £156.16 for couples.
The news, however, was not met with applause by charities such as Age Concern and Help the Aged who suggested that the substantial drop in retirement income over the past 12 months, low interest rates and the VAT increase on 1 January will counteract any rise.
But those who did see it as a positive initiative may wish to reconsider their verdict in light of the fact that the rise will not apply to SERPS and other similar pension top ups. Speaking to the BBC, Pensions Minister Angela Eagle said the rate had been frozen in these cases to prevent ‘confusion and unfairness’.
According to the Daily Telegraph, some 10 million pensioners will suffer financial problems due to the freeze, which applies to a number of pension top ups including SERPS (State Earnings Related Pension Scheme), small earnings related supplements and graduated pensions and will also affect the £7 per week payable to those who delay retirement until they are 60 years old and the £57 payment for men with wives under 60.
Geoff Charles of Equity Release Specialists Bower says he isn’t surprised by the news and agrees with the opinion of the various charities who have made their voice known that it is a case of ‘give with one hand and take with the other’. ‘I still can’t see why the Government doesn’t adopt a common sense attitude and put some backing behind Equity Release,’ he says and continues, ‘I am in no doubt that even more pensioners will be looking to fund their retirement by releasing value from their homes now.’