Pension Risks Involved With Equity Release Schemes February 9, 2010 at 11:19 am
With an equity release scheme you will be able to earn additional money for your retirement needs. You should watch for how you are working with one of these schemes though. Equity release can easily impact the ability of you to get pension payments that you would normally get upon retirement.
When using one of the various types of equity release schemes on the market you are essentially getting a new source of income with regards to the equity that you have gotten over time in your property. However because it is interpreted in United Kingdom law as a new source of income it can cause you to end up losing the right to get different means-tested benefits. Among these benefits are pensions that you would normally get.
Because of the new income you will more than likely not be able to receive money from pension payments. In many cases your pension payments will resume after the amount of money you would get through equity release runs out.
It will be best when looking into equity release schemes to see if you will be able to continue to receive pension payments at the same time. This will be especially important if you are looking to spend money on something of interest to you upon retirement.
You may also be able to qualify for an assessed income period when getting an equity release plan ready. If you have a partner and one is over 65 years old and the other is over 60 then you should be able to qualify for a period of time to not report any changes to any pensions or other payments you are getting. Not all people will qualify for this service though.
It also helps to see what type of payment plan you would be getting with an equity release scheme. In some cases you will be able to get payments on a monthly basis. In other cases your payments will be in one lump sum and you will not be able to collect pension payments for a specific period of time. Be sure to check with how you will be paid in your plan.
Be sure to watch for all of these pension risks when you are looking into equity release schemes. When working with an equity release you may not be able to qualify for getting pensions or any other type of means-tested benefit. As a result of this there is a possibility that you will not be able to qualify for any pension payments while receiving income from an equity release scheme.
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