The event convened to discuss the future of equity release in retirement planning and the role of Safe Home Income Plans (SHIP), the trade body representing over 90% of the equity release sector.
Organisations such as the OFT, FSA and HM Treasury debated the key challenges which need to be addressed in order to achieve a more significant use of safe equity release. This debate initiated a policy consultation process which will result in the publishing of a SHIP White Paper in Summer 2009.
The key themes debated were:
Lack of consumer knowledge and understanding
Definition of the ‘equity release industry'
How to combat the historically negative reputation
Lack of developed distribution channels
Attitude of Government policy towards retirement funding
Confusion with unregulated products (e.g. SARB)
Baroness Hollis, speaking at the event, commented: ‘It is distressing to see people unable to finance the retirement they need, while they are hanging onto an asset they could use. People don't always understand longevity, and that they may have 30 years in retirement. Safe equity release could help them stay in their own homes for longer. We need to see pensions and housing together as a continuum of assets to be used both before and after retirement."
Andrea Rozario, Director General of SHIP, commented: "For many years it has been predicted that equity release will grow enormously in response to the gap in retirement funding. However, whilst there has been growth, it has been modest compared to the underlying assets and to the financial needs and aspirations of a growing retired population. The crude figures are that the amount of equity amongst retired people (even allowing for the recent downturn) is of the order of £ 841 billion. But the amount of equity released is running at only circa £1.2 billion per annum - a very small percentage of the equity in place.
"SHIP wishes to engender a policy debate to examine the issues and to establish whether, across a broad range of interested parties, there could be consensus that safe equity release really could be a more significant part of retirement funding and what steps could be taken to achieve this."
