The Equity Release Council has called for property wealth to be included in the pension dashboards of savers in order to give, “a complete overview of their accumulated assets to make the best decision when planning how to fund their retirement.”
In a letter to Guy Opperman, the pensions minister, David Burrowes, chairman of the Equity Release Council, said: “Life expectancy and standards of living have grown for the generations now nearing retirement, and there is a danger that many of this generation have inadequate savings to cover an unaccounted-for period without income.
“Equity release provides an important option to meet this shortfall. In order for individuals to make an informed choice, it is key that they understand the true value of their housing wealth and we would therefore welcome this asset class included in the dashboard.”
What is the Pensions Dashboard?
It is an online platform that will allow people to view and manage all their pensions in one place. It was proposed initially to try to help reduce the amount of pension savings that go unclaimed. Online pension dashboards are expected to be introduced in 2019.
The idea of including property wealth has received mixed responses. Many people welcome the idea of providing a bigger picture. As more people release equity from their property in order to top up their pension income in retirement, it is easy to see how having these details in the same place could be beneficial.
Others would prefer to keep the value of property outside of the dashboard so that the focus is on pension savings alone.
This debate over the “scope” of the dashboard will be of interest to consumers and advisers alike, but the importance of considering property in retirement planning is something both should agree on.
We are living longer and many of us will retire with a lower income, or less liquid funds, than we would like. Considering our options, including equity release, downsizing and selling property are things that many of us will likely deliberate and seek advice on from specialists.
Property wealth has become an increasingly popular way to fund gaps in retirement. This is because equity release allows homeowners over the age of 55 to borrow against the value of their homes.
Last year, according to the Equity Release Council, those aged over-55 released 50p from the value of their homes for every £1 of savings accessed via flexible pension payments.
If you would like to speak to an adviser about equity release or if you would like us to refer you to a specialist for a pension review, get in touch.