The government needs to promote the option of releasing equity to give people a financial boost in retirement, according to a poll of industry members and financial professionals at the inaugural Great Retirement Money Debate, hosted by the Equity Release Council at the Royal Society of Medicine this week.
84% of the audience – which included over 150 representatives from providers, advisers, membership bodies, charities, think tanks and other organisations across the retirement industry – felt the government currently wasn’t doing enough in this regard.
The event was chaired by BBC Radio 4 Money Box presenter Paul Lewis, with a panel featuring Nigel Waterson (Equity Release Council chairman), David Sinclair (International Longevity Centre UK director), Jane Vass (Age UK head of public policy), David Thomas (Personal Finance Society president) and Paul Johnson (Institute of Fiscal Studies director).
Discussion topics included the growing popularity of equity release and the wider issue of lending into retirement, with calls for more providers and products to boost the existing options – particularly in light of difficulties faced by some older consumers in the wake of the Mortgage Market Review (MMR).
A second audience vote found that 75% thought the new pension freedoms will have a positive impact on the equity release industry. But opinion was split over how the pension revolution will be seen a decade from now.
49% felt it will be seen as a great benefit to consumers, yet 36% were worried it will be a disaster – a view which was linked to fears over access to advice and the risk of falling prey to scams. The remaining 15% of the audience predicted the pension freedoms will be seen as a non-event in ten years’ time.
Waterson said: “The coalition government threw its weight behind pensions, not just by ushering in more freedom and choice for pension savers but by introducing auto-enrolment to get more people actively saving. Both changes hold great potential, but pensions are still just part of the equation when it comes to supporting our ageing population – particularly when the average DC pot of £25,000 is so modest.
“When parliamentary business resumes, the new government simply cannot afford to keep putting its eggs in one basket and overlook the potential benefit of more people tapping into their housing wealth. We urge the Treasury to take ownership of the issue and focus efforts across government on signposting consumers to consider equity release among their options for funding retirement. Using the Pension Wise service to pose this question to over-55 homeowners would be an excellent start.
“For its part, the industry must continue to explore product innovation based on customer needs. The arrival of new providers in the market will boost these efforts, and we also need to attract more expert advisers to satisfy demand and help people weigh up all the options at their disposal.”