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State pension set to rise in April 2021
Derin Clark

Derin Clark

Online Reporter
Published: 23/12/2020

The state pension is rising by 2.5% in April 2021, resulting in retirees getting up to an extra £228.80 a year.

State pensions are increased each year either in line with earnings, the consumer price index (CPI) or 2.5%, whichever is highest – known as the triple lock system. As inflation was 0.5% in September and earnings have remained low throughout 2020, the triple lock system means that retirees will receive a 2.5% increase to their state pension in April.

As a result of the 2.5% increase, from April those on the new full state pension will get an extra £4.40 a week, increasing the weekly pension to £179.60, which results in an extra £228.80 over the 12-month period. Meanwhile, those on the old full state pension, will get an extra £3.40 a week, increasing the weekly pension to £137.65, which results in an extra £176.80 over the year.

Although the 2.5% increase will be welcomed by pensioners, some finance experts are questioning how long the Government will continue with the triple lock system particularly as the country continues to feel the economic fallout from the Coronavirus pandemic.

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Should borrowers use a high street lender or a specialist for a lifetime mortgage?

Lifetime mortgages are becoming increasingly common as more consumers look to release the cash locked up in the value of their home. A lifetime mortgage is a type of equity release only available to homeowners aged 55 and over. It has become increasingly popular way for retirees to access tax-free cash to boost pensions, fund home improvements or for holidays with no need to pay the money back until after the borrower goes into long term care or passes away. The money borrowed does accrue interest and the amount of interest borrowers owe can quickly build up.


Over the years more lenders have started to offer lifetime mortgages and the average fixed interest rates have also reduced. The traditional equity release lenders such as Canada Life and Legal and General have been joined by high street names such as Nationwide Building Society, Santander, TSB and Lloyds Bank. We’ve compared equity release providers below to help borrowers decide if they prefer to use a high street name or a specialist lender.

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Pension drawdown charges cut across the market

Latest analysis from interactive investor (ii) has revealed that personal pension providers have begun competing in earnest for drawdown customers, with many platforms reducing or removing drawdown fees altogether. Could this be a good time to consider pension drawdown?

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Retiring soon – or not?

Written by Vince Smith-Hughes, director of specialist business support at Prudential UK

This article is not intended to be financial advice to any individual. The views expressed are those of the author and Moneyfacts.co.uk does not endorse the content.

 

The pandemic has brought many terrible consequences. As well as the tragic human cost, it has also had a significant impact on financial markets. At one point in March, the FTSE 100 (the index tracking the 100 largest companies in the UK) was down by over a third compared with the position at the start of the year. This came as quite a shock to many people, as prior to this year we have seen a significant bull market during the past five years, part of the longest bull run in history. Since March, we have seen markets recover at least partially, dependant on where you are invested.
One particular group who are extremely concerned are those that had planned to retire in the next five years. But how will your pension be affected? Let’s take a look at the different types of schemes you may have.

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The best lifetime mortgage rates available during November 2020

Lifetime mortgage rates have been falling over the past years, making the deals far more competitive. As such, borrowers considering releasing equity from their homes have many more plans to choose from. Although speaking to an equity release broker can help borrowers to choose the right product for their individual circumstances (and some products may only be available from an independent equity release adviser), below we’ve highlighted a selection of the lowest rates available on lifetime mortgages that allow drawdown.

It should be noted that the plans we’ve highlighted are not endorsed by Moneyfacts.co.uk, but have instead been chosen because they offer the lowest rates listed by Moneyfacts for the scenario that we have selected. For more information about equity release, take a look at our equity release FAQs page.

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Recent News

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Rise in homeowners borrowing through equity release

4th November 2020

There was a 41% increase in the number of people taking out equity release between July and September compared to the previous three months, a report released by the Equity Release Council has revealed

There was a 41% increase in the number of people taking out equity release between July and September compared to the previous three months, a report released by the Equity Release Council has revealed

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Can you get equity release if you live in a flood area?

29th October 2020

As climate change starts to have a greater impact on our environment, many homeowners are finding that homes are more at risk of flooding than they were 10 or 20 years ago

As climate change starts to have a greater impact on our environment, many homeowners are finding that homes are more at risk of flooding than they were 10 or 20 years ago

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The alternatives to a workplace pension when saving for retirement

29th October 2020

The auto-enrolment workplace pension scheme is credited with encouraging the vast majority of workers to save towards their retirement

The auto-enrolment workplace pension scheme is credited with encouraging the vast majority of workers to save towards their retirement

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Pension fund recovery slows – how will this impact your retirement?

27th October 2020

Although pension funds are starting to recover, new data shows that between July and September the recovery fell significantly compared to the previous three months, putting into doubt how quickly pension funds will recover and when older workers will be able to retire

Although pension funds are starting to recover, new data shows that between July and September the recovery fell significantly compared to the previous three month

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Most Popular Retirement News

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State pension set to rise in April 2021

23rd December 2020

The state pension is rising by 2.5% in April 2021, resulting in retirees getting up to an extra £228.80 a year

The state pension is rising by 2.5% in April 2021, resulting in retirees getting up to an extra £228.80 a year

Read More
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Pensioners need a £33,000 a year income to enjoy a comfortable retirement

17th October 2019

In order for workers to enjoy a comfortable retirement that includes holidays abroad, a generous clothing allowance and a car they will need to have saved enough for a £33,000 per year income

In order for workers to enjoy a comfortable retirement they will need to have saved enough for a £33,000 per year income

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Would you consolidate your pensions?

22nd February 2016

The nature of the jobs market has changed a great deal in recent decades, which means people can amass a number of workplace pensions during a career. As a result, consolidation is becoming an increasingly necessary route, but would you consider it?

The nature of the jobs market has changed a great deal in recent decades, which means people can amass a number of workplace pensions during a career. As a...

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Retirees with equity release could save money with an equity release remortgage

16th June 2020

Those who have borrowed money using equity release may find that an equity release remortgage could now significantly reduce the cost of this debt and help to protect the value of their property as part of their estate.

Those who have borrowed money using equity release may find that an equity release remortgage could now significantly reduce the cost of this debt and help to p

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