- Just 26% of all UK adults feel they could live comfortably on
the proposed flat rate state pension
New research from the Equity Release Solicitors Alliance (ERSA)
has found almost two-thirds (63%) of homeowners aged 66+ wouldn't
be able to live comfortably on the proposed flat rate state
pension, even if they had no mortgage or rent to pay.
Just one in four of all UK adults feel they could live
comfortably on the proposed new flat rate pension of £7,280 per
year (£560 per month). However, the number of people who consider
the proposed amount will not be enough to live on increases
markedly with age as 38% of 18-29 year olds do not feel they could
live comfortably on this amount in retirement compared to 63% of
those aged 66+, perhaps reflecting the reality faced by the older
Claire Barker, Chairman of ERSA
"The Government is seeking to encourage greater individual
responsibility in retirement planning. As such people will
need to carefully assess how they will provide themselves with an
income to supplement the proposed new flat rate pension.
"People in retirement face different demands on their income.
They are more exposed to specific price rises - such as fuel price
hikes - and unfortunately as they get older they may face
substantial costs arising from long term care while living on a
relatively fixed income. For many people in retirement their home
will remain their largest asset and therefore - with the average
house price in the UK standing at £161,823 in May* - in some cases
it will make sense that people look to equity release to provide
monies to help pay for the costs associated with retirement.
ERSA's quarterly tracking survey found there has been an upsurge
in the number of people who now hold a positive view of
equity release compared to two years ago, and 19% of people said
they are now definitely considering using or will use equity
release to provide funds for retirement costs (up 1% on the
previous survey in March 2011).
The survey found that a Government stamp of approval would have
a significant impact on the equity release market, with 32% saying
this would make a positive difference to their likelihood of taking
out an equity release product in the future.
Claire Barker added,
"This Government has been very focused on retirement funding
issues and as such equity release is being increasingly talked
about at the highest levels. People are being pushed to examine how
they will finance their retirement and for many people equity
release will be a suitable option. It is vital that people
understand the importance of taking professional financial advice
to create the most suitable plans for their retirement, and just as
importantly is the role of solicitors who can make sure people
understand the legal obligations attaching to them."
- Ends -
Editors notes:Independent online survey undertaken by
Wriglesworth Research in June 2011 among 1,105 UK nationally
representative consumers aged 18-84, 59% of which were
* According to the latest Land Registry