People should consider unlocking capital through equity release and use it to bolster their pension funds , taking advantage of tax relief, according to Legal and General.
At the Centre for Future Studies conference in London, L&G group executive director Kate Avery said people could use equity release to access funds and then transfer the cash into a pension.
She said: “I think people will be better off getting capital from equity-release and putting that money into a pension to get the pension tax relief. I know it will be controversial to some in the industry.”
But Safe Home Income Plans chief executive Jon King attacked the idea, saying he is against the principle of using capital unlocked through equity release for investment.
He says that you would have to provide an unachievable guarantee that the investment would beat the interest being accumulated through equity release.
The Treasury select committee has raised concerns in the past about advisers recommending funds from equity release to be invested in the stockmarket.
King say: “I am dead set against this. There is no guarantee over the returns in a pension fund and using equity release to fund any sort of investment vehicle is not a good idea.”