Pensioner equity release grows by 15pc

Nia Williams

May 13, 2013

The analysis found the total loss of income from investment and savings for pensioners is around £4.6bn with the average retired household having received around £1,863, or 10% of their annual income, from investments and savings in 2007/08.

However as we enter the 50th consecutive month of sub 1% interest rates that figure has fallen to £1,207, representing a 34% cut.

Dean Mirfin, group director at Key Retirement Solutions, said: “Investment and savings income for retired households has been hammered by the ongoing financial crisis and there appears to be little hope of a revival in the near future.

“The Government’s Funding for Lending Scheme is doing a great job for borrowers but savers are suffering and there is little sign of the Bank of England increasing the base rate in the near future.

“It remains the case though that pensioners generally do have housing wealth and no mortgages and are literally sitting on wealth estimated at £752bn.

“In 2012 the amount of pensioner equity released from property wealth grew by 15% over 2011. This is expected to increase again as the squeeze on income continues.”

The ongoing squeeze on annuities is piling the pressure on people retiring now – the best annuity rates currently are around 29% lower than in 2008.

The payout currently on a £100,000 fund is around £5,428 compared with £7,676 in September 2008 when rates were at a five-year high.

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