News Review: Equity Release
How to unlock pensioners’ property wealth by
Andrea Rozario, director general, SHIP
despite a challenging year in 2010 this year started brightly for the equity release sector. Stonehaven is back in the market after its temporary withdrawal last year and there are strong indications that other lenders are making plans to enter the market too. on top of this we’ve also
seen another respected brand enter the equity release market on the advisory side this year, with the introduction of a new equity release advice service from respected charity age uK. the service has been launched in association with Just retirement Solutions and is warmly welcomed as it can only help to increase awareness and understanding of equity release among consumers. it is largely thanks to the
hard work of those involved in the equity release sector over the past few years that there is this growing understanding of the role of equity release among consumers. But what is coming through now is the amount of interest and understanding that has permeated up to the highest level.
Since coming to power, the
government has made it clear it will not be able to provide all-encompassing retirement funding and is considering all the other available options. the last series of proposals set out how it will deal with the “staggering” increase in longevity and the increasing
number of people who will be drawing a state pension in the future.
Proposals in the last month it began to flesh out these proposals and has made a series of announcements in the last month which will shape the future of retirement finance forever. the dilnot commission’s Lord Warner admitted that universal state provision for retirement was now a “fantasy” and all other funding options needed to be explored. Lord Warner went on
to explicitly reference the idea that the baby boomer generation could use the wealth built up in their property to pay for care in old age – highlighting the government’s awareness of the role equity release can play. the issue of retirement funding was then addressed again by the work and pensions secretary
iain
duncan Smith in a speech in early march when he developed the proposal made last october to abolish means-testing for pensions and gave a guarantee the government will “fundamentally simplify” the pension system, creating a universal, flat basic payment system. While he has not yet
set out the details of how this would work in practice it could result in a payment of £100 per week with up to an additional £40 for those people who have never contracted out of the state second pension or SerPs.
12 mortgage introducer APRIL 2011
Pension review the immediate discussion over whether this will leave people better or worse off and whether it will be eroded by inflation was cut short by the publication of the highly anticipated review of public sector pensions by Lord Hutton. in it he called for the replacement of existing final salary arrangements for public sector switching to a career average basis and also increasing the minimum retirement age. Just what these changes will
mean for those in retirement in the long-term remains to be seen but in the short-term the economic situation has already had a negative impact on the finances of the uK’s over-55s.
“The baby
boomer genera- tion could use the wealth built up in their property to pay for care”
Housing wealth new research from aviva confirmed 80% of over-55s are homeowners and a good proportion have more than £200,000 of equity tied up in the homes, a figure which increases to more than £250,000 for more than eight in every ten people aged over 75. it was not a surprise
to hear that older people have accumulated a great deal of housing wealth and this can play a vital role in supplementing their finances in later years. But it was
encouraging that of those over-55s carrying debts 4% are already planning to use equity release to pay them down in retirement, which shows the understanding of these products is growing. By releasing the equity
from their homes they have the opportunity to afford a better quality of retirement – whether this is by paying off debts, making home improvements or just supplementing their existing income. there is a golden opportunity for advisers to speak to their clients about finance in retirement in order to weigh up all the options and find the solution that is most suitable for the individual. recent research showed
that 60% of SHiP members are confident the government will increasingly look to the industry to provide it with ideas on how to bridge the pensions gap and fund long- term care. nevertheless, the hard work is not over and practitioners agree there is still work to be done. Some 86% of members in agreement that SHiP needs to continue to work to increase awareness and understanding of equity release among the government and consumers. SHiP’s mission this year
is to continue to educate consumers about equity release in order that they can weigh it up against other retirement planning tools. With more providers coming into the market it is clear that there are many opportunities ahead for growth and engagement at the highest level.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60