31% of over-55s say they would prefer to use property wealth to fund retirement before accessing their pension funds due to the tax treatment, new research by equity release lender More 2 Life among over-45s suggests.
Its research shows the launch of pension freedoms is prompting a shift in how savers look at retirement planning and income sources. Property wealth accessed via equity release is tax-free compared with pension income while pension funds can be left tax-free or subject only to marginal income tax rates.
28% of retirement savers would welcome the ability to borrow against the value of their pension funds.
More 2 Life believes the willingness to consider using property wealth and borrowing against pension funds highlights the need for more innovation from retirement lenders and has commissioned a report into the issue of retirement lending – Lending in Retirement: The way ahead for customers and advisers.
Dave Harris, managing director at More 2 Life, said: “The tax efficiency of using housing wealth alongside pension savings is becoming clearer now that pension freedoms are up and running.
“It is likely that traditional retirement income products will be replaced – or at least complemented – by new investment strategies as savers look to maximise the returns from all their assets including property wealth and pension funds.
“Retirement lending needs to be addressed as part of that and it is a real growth opportunity for lenders and advisers which will genuinely benefit customers. With just 12% of over 45s confident they will not face an income shortfall in retirement individuals will need to look at all their assets to fund their retirement comfortably. And with retirees in the UK controlling around £1.4 trillion of property wealth, the opportunities for creating a more comfortable, financially secure retirement through lending solutions are enormous.”