News Review: Equity Release


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People should be aware


by Andrea Rozario director general, SHIP


At the beginning of February I attended the launch of the Workplace Retirement Income


Commission,


which is being chaired by Parliamentary heavyweight and former Treasury Select Committee chairman, Lord McFall. Instigated by the National


Association of Pension Funds, the WRIC is an independent commission which has been established to “investigate why the pensions system is failing so many working people, and ask how the UK can radically change its approach to saving for retirement”. At the launch, the NAPF


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18 MORTGAGE INTRODUCER MARCH 2011


took the opportunity to release the results of a poll it carried out with YouGov; adding its weight to the other recent reports which have highlighted the fi nancial problems facing those either approaching or already in retirement. The poll found that 43% of those who have yet to retire feel they do not have suffi cient income to save for retirement and 55% are worried they will not have enough money to live on in old age. To those of us working in fi nancial services there is nothing new in these fi gures, but repetition can help to cement that this real problem in the minds of the general public. Over the longer-term, it is


clear that a greater proportion of funding for retirement will have to come from people’s personal savings, but


increasing savings is always a balancing act with other pressures on income. For example, the current economic squeeze and rising cost of living means people have to allocate their fi nances very carefully and unfortunately for many, retirement planning is falling to the bottom of this list. Those with a young family to support for example are most likely to be concerned with providing for them – especially as retirement seems a long way off, or to be “put off until tomorrow” as revealed by the recent Aviva Family Finances Report which found that only 28% of regularly pay into a private or employee pension. It is vitally important


therefore that people in this situation are made aware of the potential of what is usually the largest asset at their disposal – their home. As such, I welcome the WRIC’s mention of equity release as a means of non-workplace retirement saving, and intend to be fully involved on behalf of the equity release industry in setting out fi rm proposals prior to when the Commission reports back in October later this year. The creation of the


Commission is another positive sign that the issue of funding in retirement has been pushed towards the top of the political agenda, and it follows a couple of other proposed changes already this year which have also been designed to address this problem. The fi rst was the confi rmation at the beginning of the year of auto-enrolment, which will start to come into effect in October 2012.


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