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
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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