Pensioners could be turning to equity release to supplement their incomes, after missing pension contributions in their working lives.
The government-backed Pensions Advisory Service believes that many employees, particularly women, are missing out due to the fact that they work part-time, the BBC reported.
According to current pension rules, everyone who earns below a pre-set salary threshold does not generate pension contributions, whether through National Insurance or credits.
This means that low-paid workers, including many women who returned to part-time work only after having children, often receive either partial state pensions or no pension at all when they retire.
In turn, this could lead pensioner households to seek out alternative sources of income such as equity release.
Data from the Pensions Advisory Service show that only one in three women currently get a full pension.
However, a government minister said that future reforms would result in this total rising to 75 per cent.
Also speaking to the broadcaster, Malcolm McLean, chief executive of the Pensions Advisory Service, commented: "There could be thousands of women … who are unaware that by increasing their hours [of] work slightly and increasing their pay up to the lower earnings limit neither they nor the employer will be required to pay National Insurance contributions but they will be treated as having paid them."
Current rules state that National Insurance kicks in on earnings of £110 per week or more.
The pension credits threshold stands at £95 per week.
Posted by Claire Ford
