Pre-Budget Report Could Strengthen Equity Release Market
Alistair Darling’s pre-Budget announcement (Wednesday 9 December 2009), as expected, affected the equity release market. However, his announcement to reduce tax relief on pension savings could lead to retired homeowners pursuing other options for finance – notably equity release.
Andrea Rozario, director general of SHIP, believes the pre-Budget report strengthens the case for equity release but feels that the issue of funding an ageing population isn’t going away.
“A duty to consider all retirement funding options – including equity release”
By reducing tax relief, as outlined by the Chancellor of the Exchequer, funding retirement might become difficult for some homeowners. This is why Ms. Rozario believes more information about alternative financial sources, like equity release, should be available. She is quoted as saying:
“The reduction in tax relief on pension savings and the reduction in the future value of public sector pensions may help balance government books but are measures that will cut the future pension income of millions.
“We believe that the government has a duty to pensioners to consider all retirement funding options - including equity release.”
An Estimated £700 Billion Tied Up In Housing Equity
Ms. Rozario continued by outlining just how much value there is in housing that can be unlocked by an equity release plan.
“There is an estimated £700 billion tied up in housing equity by those in retirement: money which could be used to improve the quality of life for many pensioners.”
An equity release plan has the potential to release a lump sun or regular payments to supplement income in retirement.
Ms. Rozario concluded by saying: “We urge those in government to go further in promoting it (equity release) as a viable mainstream option for retirees.”
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