The National Association of Pension Funds, the leading voice of retirement provision through the workplace, has revealed that half a million people are retiring each year on less pension income than they could receive.
On this theme, recent media reports in the Daily Express and in a Channel 4 documentary (“What’s your pension really worth”) suggest that many of those at or in retirement are not shopping around for an annuity and hence do not have the pension income which they could otherwise achieve. The reports recommend people to make use of a whole of market firm who have access to the best deals available rather than accept the first offer from their current provider.
Research from the Prudential indicates that three quarters of the UK’s pensioners are homeowners, with more than a quarter of them expecting to downsize in order to make retirement more affordable. Many of these people will also be considering equity release as a means of supplementing their pension income. In this regard, the importance of taking whole of market financial advice is equally important.
There is an increasingly number of equity release plans available including Interest Only Lifetime Mortgages in which no capital repayments are required until the death of the surviving homeowner. Each product has its own niche characteristics and, given that the plans are designed to last for life- just like an annuity- it is essential for homeowners to select the most suitable plan for meeting their personal circumstances.
In order to assure that the correct choice is made, it is normally preferable to have a home visit from a specialist equity release adviser who can run through the benefits and disadvantages of each product. The adviser will guide clients through the application process and assure that the right option is taken.
Some equity release advisers will only offer products from a panel of providers or indeed in some cases, only their own plan. This restriction on choice does not apply if consumers make use of a firm like Bower who offer independent financial advice, including visits in the comfort of your own home.
