News Review: Equity Release
Supporting 14,678,000 in old age is going to be difficult
by
Andrea Rozario
director general, SHIP
For those keenly interested in the equity release mar- ket, the last month has been eventful. the government published its White Paper on social care, SHiP launched an important campaign for clarity over state benefits, and there has been positive press activity surrounding the latest market information from the intermediary sector. i said last month that poli-
ticians had started to engage with equity release and, from my own experiences in the last month, this remains the case. However, it was disap- pointing that it didn’t fea- ture in the government’s White Paper on social care, issued on 30 march 2010. the Labour government has proposed the launch of
a new national care Service that will provide vulnerable adults with free personal care. Yet, the paper does not explain how much of this cost will have to be borne by society.
Labour’s aim to ensure
that older people can be looked after at home will have a major impact on eq- uity release but the products need to evolve to fill emerg- ing needs. Labour will en- courage people to make their own decisions regarding care options and in my view, our aging population will be far more demanding of the op- tions available to them. the conservatives, in their manifesto, state that they also want to give people more control over their health and social care but they don’t ex- plain where people will get access to advice. their ‘home protection scheme’ would ensure that no one is forced to sell their homes in order to pay for residential care.
This month SHIP launched a campaign to clarify the relationship between equity release and state benefits. We have long been aware that advisers are apprehensive of entering the market because of the confusing position of benefits for those taking an equity release loan. As we enter a new Parliament, SHIP’s objective is to keep older customers firmly on the agenda by asking advisers and clients about the issues that concern them most. SHIP is conducting a survey at the moment and needs the opinions and experiences of as many advisers as possible to give weight to the results which will be
However, they would pay for this through a one-off vol- untary insurance premium which would cost around £8,000. this is likely to lead to an increased burden on the taxpayer as they haven’t explained where this figure comes from nor, indeed, how it will be invested to provide funds in later life. moreover, the vast majority of older people simply don’t have this sort of liquid equity available. the Liberal democrats
key proposals affecting older people is a plan to scrap the default retirement age, and also to allow people to ac- cess part of their pension fund early. currently it is a deterrent to people to save into a pension when they can’t get at it until they retire, but by the same token, if people can easily access their pension pot, with high debt levels on the increase, more people are likely to turn to their pension to settle their debts leaving them in a
analysed in June. The findings will be presented to the relevant Government department. The questionnaire is aimed at all advisers involved in equity release and those who are frustrated at the lack of definitive guidelines. The questions aim to establish the level of confidence among advisers and to get a picture of how customers currently view equity release and benefits. The questionnaire is live until the end of May and to thank advisers for taking part, there will be a prize draw for one lucky adviser to win £100. http://www.logiforms.com/formdata/user_ forms/14397_8940992/76483/
worse position when they are older. there is a clear belief that
people who have worked hard to be able to afford their own home and leave a legacy for younger genera- tions should not be forced to sell all of their assets to pay for care.
New SHIP research revealed that despite the majority of business coming through advisers, customers aren’t willing to pay for an IFA. Advisers must continue to demonstrate the value they add. Our research shows that currently 32% of people are searching the internet for financial advice when planning retirement finances versus the 8% who regularly consult an IFA.
Despite these figures, 73% of the people SHIP questioned plan to manage their finances themselves, without seeking advice from an IFA. Product providers should be concerned that 14% had never heard of equity release. Consumers are clearly likely to miss out on the full spectrum of retirement planning products. Everyone should have a responsibility for their own costs rather than believing that the state will pay for us in later life.
10 mortgage introducer MAY 2010
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