Government Urged To Accept Equity Release As Solution To Pension Funding Crisis
Safe Home Income Plans (SHIP), the independent trade body which represents the majority of the equity release market, has launched a discussion paper urging the Government to initiate a formal review into the sector to plug the huge gap in consumers’ pension provision.
Commenting on the launch of the discussion paper, entitled ‘Facing the Future, Redefining Equity Release to meet today’s social and economic challenges’, Baroness Patricia Hollis, a Labour member of the House of Lords, said: “It is rare for the public and private interests to coincide as they do with equity release. Equity release meets a truly urgent social need in the most decent way possible- government ministers should be singing its praises, and making it a core part of retirement funding planning.
“This report is a crucial first step in bringing equity release into the public policy arena. I recommend that equity release should develop partnerships with local government, and specialists in other areas to develop SHIP ‘kitemarked’ products. Finally, alongside a formal review of the industry, a government department should take responsibility for equity release and make sure that it is a major player at the table. Equity release must be transformed from a distress option, and taken mainstream.”
SHIP also believes that formal backing of equity release by the Government could bring the sector into the public eye and significantly increase the interest in equity release as an alternative option for pensioners looking to boost their retirement income.
One of the biggest equity release providers, Aviva, has also backed the calls for the Government to instigate a review of the sector to address a looming retirement funding crisis. Group product manager for Aviva UK Life, Dominic Fraser-Smith, says that the sector has moved on from its inception in the early 1980s and that now is the time for Government to get more involved.
He said: “Two of the biggest hurdles to this market’s growth are public perception of these products stemming from historic issues and consumers fear that they may be financially worse off if they use equity release. We believe that a review which looked to clearly define the government’s overall position on these products – and especially with regards to benefits – would engender much needed confidence. This would see more providers, advisers and ultimately consumers entering the market – a vital step towards solving the looming retirement funding crisis.”
