The Government has made a number of changes to the benefit rules that may reduce the impact that equity release could have on means tested benefits.
Andrea Rozario, director general of SHIP, explained: "Over the last nine months, the Government has announced changes that we believe will mean that those consumers who wish to take out an equity release plan can do so in the knowledge that they may not see certain benefits reduce or cease all together.”
The Government has changed the rules on the application of an Assessed Income Period rules (AIP) within Pension Credit for those aged 80 years old or over. From April 2009, these customers will no longer have their retirement income and assets reviewed every five years, nor do they need to report any changes that occur to these. In effect those aged 75 and over, if in an AIP will benefit from this change.
They have raised the capital threshold to £10,000 in Pension Credit and pension age Housing Benefit and Council Tax Benefit from November 2009, which means that pensioners can have up to £10,000 in savings without it affecting their benefit. If pensioners take out an equity release product and overall their savings remain at £10,000 or below, there will be no impact on their benefit payments.
David Wright of Equity Release Specialists Sixty Plus said “State benefits have always been one of the important matters to consider when looking at equity release so it is good news for everyone that the savings limit has been increased.”
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