Retirees top up pensions with ER
In the first quarter of 2015 14% used equity release to supplement pensions, up from 6% in the fourth quarter of 2014.
The most popular motivator (42%) for taking out equity release was debt consolidation, while just 11% referred to cost of living, down from 17% in the fourth quarter of 2014.
Almost three quarters (70%) of equity release advisers expect the market to continue to grow over the next six months.
Geoff Charles, chief executive of Bower Retirement Services, said: “We shouldn’t forget that there is a sizeable slice of people who are unable to access their pension pots, even under the new pension rules; those with final salary or ‘defined benefit’ pension schemes.
“For these people, who aren’t able to drawdown any part of their pension pot apart from the initial tax-free lump sum, equity release could be well worth considering, depending on their circumstances.”
Three fifths (60%) of advisers are seeing younger clients enquiring about equity release, while the majority (72%) involve their families in the decision-making process.
Of the people who don’t involve their families some feel it’s a personal matter for them (68%) and others have fallen out with their families (32%).
Charles added: “The family members who stand to gain from an inheritance are unselfishly encouraging retirees to release their property wealth to enjoy their retirement or boost their pensions.
“While always worth careful thought, equity release is not suitable for everyone and our latest figures show that our advisers recommended 7% of clients in the last quarter – up from 5% in Q4 2014 – consider other means such as existing savings or pensions.
“As demand for equity release grows, it is fundamental that advisers continue to act in their clients’ best interests. This is especially crucial where the client chooses not to involve family members in their decision, either because they feel it’s entirely their personal decision or because they are estranged from their family.”