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Pensioners hit by rate cuts turning to equity release

More savers are looking to equity release as the reduction in interest rates has cut pensioners’ income by almost a quarter over the last year.

Safe Homes Income Plan says last year the average pensioner was getting a monthly return of £158 from their savings if they kept the capital in an easy access base rate tracker account. This amount, in addition to their monthly state pension, totalled £393.

But Ship says since April 2008, single pensioners have seen their income from savings dwindle to just £16 a month or £32 for couples.

Ship director general Andrea Rozario has urged the Government to work with Ship in promoting equity release as an “alternative for pensioners who are suffering as a result of the credit crisis”.

Better Retirement managing director Tim Eadon says more than half of all the enquiries that he receives are from people worried about short-falls from their savings.

But he says: “Advisers must look at short-term options as well. Equity release is a long-term product and not right for everyone. Advisers must not take advantage of this situation.”

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