News Review: Equity Release
Run your broker business out of the box
Building on the momentum
by Andrea Rozario director general, SHIP
It seems hard to believe but 2011 will see Safe Home Income Plans celebrating 20 years of protecting consumers and representing the UK equity release market. Since SHIP launched in
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18 MORTGAGE INTRODUCER FEBRUARY 2011
1991 there’s been a huge amount of change in the equity release market as regards product development, pricing, and providers involved in the market, but also in the increase in consumer awareness and interest. Along the way SHIP has had many noticeable successes, however what’s been most evident in more recent years – during my time as director general at least – has been the acceleration in the speed of change and also the scale in terms of the potential impact on people’s fi nances in retirement. Last year, SHIP carried
out its fi fth members’ survey, providing them with an opportunity to review developments in the equity release market over the course of 2009 and also to predict what would happen in 2010. The three main areas identifi ed by members as being crucial to a successful and vibrant equity release market in the future were: a growing consumer need (58%), a high level of regulation (21%), and an increasing political awareness of the importance of equity release (5%). Taking these three as a measure of how successful
the equity release market was, then looking back on the year 2010 represented a positive year for the development of the sector. 2010 saw the development
of a number of consumer trends which will have signifi cant impact on the future growth of the equity release market. Some of the changes
coming into place this year and will have an immediate effect. Chief among them is the switch in April to the consumer price index (CPI) from the retail price index (RPI) as the offi cial measure of infl ation for pension schemes. CPI is generally acknowledged as being lower than RPI, which has raised eyebrows among retirees, but they’ve also promised the basic state pension will see future pension increases benefi t from the ‘triple- guarantee’ of rising by the highest of earnings, the RPI or 2.5% is going to impact retirees going forward. However,
people
approaching retirement are going to have to wait longer for their State pensions as the age people become eligible to start drawing on their State pension age is beginning to increase, with women seeing a gradual increase from 60 to 65 by 2018 and to 66 for everyone by 2020. On top of this one of the other big changes coming in this year is the end to the default retirement age from 1 October 2011. Pension reform starts to
take effect from April but it will be its long term impact which will affect how equity release market looks 20 years from now.
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