This November, under the budget changes made in April, sees the pension credit limit being raised from £6,000 to £10,000. The effects of this would be felt by over 500,000 pensioners on modest incomes & should result in additional income of upto £8pw.

The current capital disregard limit of £6,000 has been present for the past decade. Previously, any savings above this level of savings reduced the amount of benefits a person would get from pension credit.

However, The Chancellor - Alastair Darling has stated this is to change from November. This increased limit to £10,000 will benefit pensioners on low incomes in different ways.

One will be the direct benefits will be in the pocket.

However, a further implication of this will be on people considering releasing equity. Previously, anyone receiving pension credit with savings over £6,000 & considering releasing equity would lose £1pw for every £500 over the limit they went.

Subsequently, with this limit now being increased to £10,000 it results in the additional £4,000 allowance providing people with upto an extra £8pw.

This was a major factor in any equity release advice provided. As part of any advice & fact finding process the adviser should ascertain whether means tested benefits are being received.

However, the resulting advice would limit any equity release to the provider minimum of £10,000. This being above the £6,000 limit could result in a loss of benefits, unless immediate capital expenditures were being made or an Income Assessment Period (AIP) was still in force.

Therefore, Novembers increase to £10,000 will rule out this potential loss of benefits on such withdrawals & as a direct consequence will result in more pensioners confidently taking out equity release schemes.