Budget changes will boost equity release market
The changes to pensions could mean providers develop innovative solutions to meet consumers’ requirements for income and capital sums for expenditure, it was added.
The annual annuity market is valued at £11.9bn, 11 times greater than that for equity release, which stands at £1.07bn.
Simon Chalk, technical manager of Equity Release at Age Partnership, said: “Increased choice is naturally very welcome, but it invariably leads to greater confusion and indecision, meaning customers will seek the reassurance of qualified advice and guidance from those intermediaries best placed to cover the full spectrum of income and capital generating products in retirement.”
Larger providers such as Aviva and LV are expected to shrug off disruption to normal flows of annuity business during the transitional period before the new rules have full effect in 2015.
Other smaller more specialised providers such as Partnership and Just Retirement meanwhile, who operate in the enhanced and care fees annuity market, are expected to experience continued growth in demand.
At £35,600, the average pension fund used to buy an annuity is dwarfed by the average £254,943 property value from which homeowners released an average £56,917 of equity in 2013.
Irrespective of how people choose to take their pension pot, it was stated, they will increasingly rely on their home to provide for their future.