Experts in the Equity Release industry have been debating the expected fallout from the recent pension reforms. Will it effect lending? If so, by how much? I suspect that we will not know the actual answer until later in the year, perhaps into the following year but one thing is for sure, the consumer now has far more choice about how they fund their retirement. It follows that options allow for choices and this means that there are more opportunities to make bad decisions. Going forward quality advice will be even more essential and possibly more complicated than it has been in the past.
Advisers that have mortgage and equity release permissions will need to work hand in hand with those who are qualified and licensed to provided holistic financial planning where unvested pension pots exist. It is probable that our clients may be best served with a combination of tax efficient, flexible pension advice, hopefully ensuring that income is available into the future whilst using their property to fund capital expenditure.
Debt repayment, whether it is secured or unsecured will continue to be an issue in the years to come. Ask most retirees if they would like to pay £10,000 off credit card debt or have £500 per annum for the rest of their lives and they are likely to opt for the debt repayment option. It is usually the same answer with mortgage debt given that lenders are not extending lending terms. These options could require advice in terms of pension options, attitude to risk, tax implications and investment opportunities. This advice must come from properly licensed advisers.
For the British, house ownership is emotional, in general, we don’t see our home solely as an investment. The combined resources of property and pension must be used in order to ensure that our clients receive the best possible outcome in their retirement. The government were right when they said they trusted us not to go out and blow our pension pots on Lamborghinis, I for one will not be buying shares in the company but the consumer does have needs. Those needs might not be as exciting as a super car but they are there and they are real. A combination of good advice and correct asset utilisation will ensure that those needs are met for those who have the luxury of choice.
By Les Pick, National Sales Manager at The Right Equity Release