Oxford Economics Equity Release Report

A recent report by Oxford Economics on equity release has sparked discussion in the industry, tracking predicted trends in demographics and pensioners' income to forecast the reality of future retirement.

According to the Department for Work and Pensions' definition of relative poverty, a startling 14% of all pensioners in 2010/11 were impoverished. The report predicts this percentage will rise over the coming years if current trends remain stagnant. However, it also reveals equity release could lift one million pensioner households out of poverty for a year between 2012 and 2040.

A combination of smaller pension contributions and an ageing population will lead to increased pensioner poverty. Taking a closer look at those defined as being in relative poverty, around 60% would have no occupational or personal pension income, while a third would have no savings or investments. However, at least 60% of this bracket would still be expected to own their own home outright, which suggests a potential for accessing money from their property to help boost retirement income. 

Equity release provides a means to convert wealth held in homes into an income stream for retirement. TheOxfordEconomics report reveals equity release could not only benefit household incomes but could aid the economy itself in the long run: generating a potential 0.2 extra percentage points of GDP by 2040, creating 22,000 new jobs and uplifting government revenues. However, this prediction is hinged on future product sales, and the product innovation which is crucial for equity release market growth.

It is vital that the equity release market continues to uphold high standards of safety and protection, while encouraging market expansion. Seeking expert advice from independent financial specialists and legal advisors is a crucial step to take before venturing down the road of equity release.   

 

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