View more on these topics

Report calls on Government to run equity release for cash-poor pensioners

A report published today has called on the Government to launch its own equity release scheme, offering additional retirement income for pensioners.

The report from Cass Business School and the International Longevity Centre says equity release backed by the Government could help asset-rich but cash-poor consumers.

It calls for the creation of a ‘UK Equity Bank’, proving annuity income in retirement in exchange for the Government taking a stake in retirees’ property.

The report says: “Our proposal is aimed at a sizeable group of older home owners who have relatively small incomes of, say, £10,000 per annum or less.”

It says the debt to the state would be expressed as a percentage of the property value, to be repaid upon death, and proposes the annuity rate be set by Government and inflation-linked.

It notes the potential strain the service could have on Government finance and says the policy should be phased in, starting with over-75s.

Authors Les Mayhew and David Smith acknowledge the scheme could not assist pensioners with limited assets.

But they argue it would allow more people to stay in their homes or finance care costs without the need to sell property.

The report also accepts tax rules do not always make equity release an appealing option.

Key Retirement Solutions director Dean Mirfin says: “The UK Equity Bank is a good debating point and positive for the equity release market as it highlights the wealth pensioners have in their homes and how it could be used for retirement income. It also highlights the issues and complexities of the relationship around benefits and taxation.

“But many taxpayers I am sure will find it very hard to understand why the Government should start offering loans against people’s houses when there is already a well-established, well regulated, and successful and growing private industry enabling homeowners to release equity from their homes.

“Lobbying would be better directed at reviewing the approach to taxation and benefits for those releasing equity.”

Recommended

Mark-Carney-with-bank-note-in-background-700.jpg
1

BoE: House price tumble fears increase but overall threat of instability drops

Fears of a house price tumble have risen for the third consecutive period despite the perceived likelihood of an economic shock reaching record lows, the Bank of England’s bi-annual risk survey shows. The six-monthly survey of banks, insurers, asset managers and other market participants began in 2008. It acts as a barometer of perceived systemic […]

Chris-Hannant-Headshot-in-2013-700.jpg
1

IFP and Apfa say ‘no’ to provider role in Budget guidance

Adviser and consumer groups have lobbied the Government not to hand providers a role in delivering Chancellor George Osborne’s Budget guidance guarantee. As part of a radical liberalisation of pension rules announced in March, Osborne promised everyone will have access to “free, impartial, face-to-face guidance” on their retirement options. However, the industry has been divided […]

Business-Handshake-Meeting-Deal-Low-Angular-700x450.jpg

Bradbury Hamilton acquires Leeds-based advice firm SBB Consulting

Consolidator Bradbury Hamilton has acquired Leeds-based advice firm SBB Consulting for an undisclosed sum. SBB Consulting, run by principal David Boult, adds 1,000 clients and £15m in assets under advice to the acquisitive national IFA.  It is the 48th acquisition Bradbury Hamilton has made since launching in 1993. The firm says it is in talks […]

1

School fees planning

Jeremy Pearson is Technical Support Manager with Canada Life’s ican Technical Services Team. Canada Life offers a range of wealth management solutions, including retirement income planning, estate planning and investment solutions from a choice of jurisdictions, including the UK, Isle of Man and Republic of Ireland. Many parents value the standard of education offered by […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. What planet are Mayhew and Smith from? They are obviously totally unaware that an excellent Equity Release Council is up and runnibg here on Earth.

  2. And who would pay for and administer this?

Leave a comment