Financially assisting a parent to retire

Brynsam

Locoblade wrote: »

Sorry I used the wrong phrase above, she doesn't qualify for Pension Credit (I wrongly said Additional State Pension) due to her savings. Not actually sure what Additional State Pension is or how we'd check if she was eligible for it?

Additional State Pension (ASP) is the earnings-link bit employees built up during their years of employment. It has variously been called Graduated Retirement Pensions, State Earnings Related Pension and State Second Pension. If she qualified for any ASP, it will already be in payment with her basic state pension.

jamesd

The old state pension that she's on is one payment from up to three individual pieces:

1. Basic state pension. 1/30th of £125.95 a week for each year where enough was paid in or where a missed year was purchased.
2. Additional state pension. An earnings-related extra bit, potentially as much as 150 or so a week for an employee with a full working life on a high income. This was accrued via the SERPS then more recently S2P portion of NI payments of people who weren't self-employed.
3. Graduated retirement pension, an earlier earnings-related scheme.

All three are just built up by paying in to the system, with no means test.

badmemory

Have you looked into what percentage she would need to increase her state pension by in order to cover her outgoings? If that is just 10% then to get that she would need to defer her state pension for a year. Would that be possible? Would her savings and/or your help be able to cope with that for a year? Or has she any missing years that it would still be possible to buy? (And then defer). Has her being self employed meant that she has years when she has not paid any NI?

Locoblade

badmemory wrote: »

Have you looked into what percentage she would need to increase her state pension by in order to cover her outgoings? If that is just 10% then to get that she would need to defer her state pension for a year. Would that be possible? Would her savings and/or your help be able to cope with that for a year? Or has she any missing years that it would still be possible to buy? (And then defer). Has her being self employed meant that she has years when she has not paid any NI?

10% increase is ~£60/month so that wouldnt be enough. If she gave up work completely she'd need about £350-£400 to compensate for that, if she continued working 1 morning a week it would be around 30% to fill that £150-£200 monthly void of reduced hours.


I'm not sure regading NI top-up, I'll have to sit down with her, get the full picture on her NI history and see if its available.

Brynsam

Locoblade wrote: »

I'm not sure regading NI top-up, I'll have to sit down with her, get the full picture on her NI history and see if its available.

She may be too old: https://www.gov.uk/voluntary-national-insurance-contributions/deadlines

AnotherJoe

wjr4 wrote: »

2-3 months for the tax relief to arrive - blimey, who are you using?! Ours is instant!

Only a few providers add the tax relief immediately. Most have a 6-8 week wait.

jamesd

Brynsam wrote: »

She may be too old: https://www.gov.uk/voluntary-national-insurance-contributions/deadlines

Locoblade wrote: »

She's 68 (born in '49)

This means that she was born too long ago to qualify for being able to go back more than the most recent six years because the earliest goes back just to 6 April 1950 births.

LinBWales

Just to say that I think you are right to discount equity release. My parents took one out without my knowledge in 2009 which I only found out about in 2015 after my dad died. And it was already uneconomic for me to try to sort it out, i.e. the amount owed was significant. However I have been reading recently about people of up to the age of 85 being able to apply for (and obtain) an ordinary mortgage on which they have to pay interest obviously, but depending on the type of mortgage, the capital may only need to be repaid after death. This could be an option especially given that there may be an inheritance coming her way?