But there are some areas of the budget that could stand the equity release sector in good stead for the future, Andrea Rozario, Director of Safe Home Income Plans (SHIP), the UKs trade body for equity release product suppliers believes that to be the case and said;

“While the emergency budget did not specifically mention equity release, it did announce a number of measures that have the potential to significantly impact the sector.  Chief amongst these are the increase in VAT from 17.5% to 20% and the review of public sector pensions.

Over 55s in the UK often have a relatively fixed income with spending weighted towards VAT-able products and significant equity in their homes.   The changes outlined in the budget mean that they will suffer from VAT increases eating into their income and then their families will be hit by death duties when they receive their inheritance.   In addition, those people who have been relying on a comfortable public sector pension when they retire could face a nasty shock and will need to seek additional sources of retirement funding.

Equity release would seem the logical answer to many of these issues and we believe that the Government changes will lead to more and more people considering equity release as an integral part of their pension planning.””

Wishful thinking or just plain common sense?

alliance & leicester international

A survey by Alliance & Leicester International has revealed that a staggering 87% of ex pats are content to choose to retire in the country that they have chosen to reside in, with France (18%), Spain (13%) and the UK (12%), being the most popular retirement destinations.

With the cost of retirement in the UK estimated to hit £400,000, ex pats intend to fund their retirement in the sun through savings (27%), UK State Pension (23%) and Private Pension (20%). Property is a major source of retirement funding with 6% relying on rental income, 6% intending to sell a residential investment and 2% opting for an equity release plan.

When considering the key factors that contribute to choosing the perfect retirement destination, better quality of life was the most popular answer with 21%, but close behind is a better climate (20%) with value for money (14%) in third.

Major concerns regarding moving abroad appear to be proximity to the UK, with well over half of those surveyed choosing to live in Europe to be closer to UK relatives and friends. Health care and medical issues- in a foreign language, concerned 22% while finances and exchange rates would concern 12%.

Ten percent of those surveyed said that they would not consider moving abroad because of family ties in the UK. Also their lifestyle allows them to take summer vacations as well as the opportunity of skiing holidays in the winter months.

Lynette Byrne, Head of Marketing at Alliance & Leicester International, commented:

“It is interesting to see that many UK expats have settled in their new home, with 87% of UK Expats intending to retire abroad.  However, while some Expats might prefer life outside the UK, they are still very attached to friends and family thus settling in European destinations that are only a low cost flight away.

This research really highlights the international nature of society today and raises some interesting questions as to how people are going to manage their finances and protect their savings against interest rate fluctuations.

Expats who bank with Alliance & Leicester International can choose to hold their savings in a sterling, US Dollar or Euro account giving them not only access to ‘Best Buy’ rates but also the opportunity to shield their retirement cash from currency fluctuations.  They can also be safe in the knowledge that they can access their money using internet banking 24 hours a day no matter where they are living.”

hodge lifetime ifa confidence index

One year on from it’s original publication The Hodge Lifetime IFA Confidence Index has just published it’s fifth quarterly report addressing the concerns,  perceptions and issues facing Independent Financial Advisers (IFA) within the equity release industry.

The latest report shows that 75% of IFAs say that interest in equity release schemes has stayed steady or shown a slight increase over the last year.

All IFAs surveyed had total confidence in advising on equity release, while 30% felt that their confidence in advising on the product had considerably increased during the year.

Tailored Advice:  The effect of equity release schemes upon state benefit entitlement remains the most important area of advice for advisers (33%), with charges and guaranteed drawdown facility ranking as the second and third most important areas (27% and 18% respectively). However, the emphasis placed on advice surrounding rates has declined over the past year.

Concerns: The negative reputation of the equity release sector portrayed by the media was the top concern harboured by IFAs (28%), and 23% still expressed their worry about the potential for equity release to be confused with sale and rent back schemes. These findings mirror those of Hodge Lifetime’s first Confidence Index from summer 2008, where both the media influence and sale and rent back confusion ranked first and second place. However, while the media portrayal remains the primary concern, fewer IFAs feel that this is the largest current problem facing equity release this year and there is now growing emphasis on unnecessary concern over falling house prices and the fear of FSA mystery shopping.

Looking ahead: With SHIP figures showing an increase in the number of plans sold in Q2 and a continued interest in the equity release market, Hodge Lifetime’s report also finds that advisers are in a strong position to take advantage of this. Looking ahead to the future, 30% of IFAs said that they planned to network more with local solicitors and mortgage advisers, 23% said they would make more use of direct marketing and 23% said they hoped to obtain referrals from existing clients as a means of increasing their equity release business in the coming year.

UK-Finance-News summary: The report shows that while IFAs have total confidence in the product, more needs to be done to instill confidence in the consumer, who is looking for a product supplied with total transparency and without future risk and complications.