Too many pensioners are unwilling to unlock the potential cash stored in their homes to fund retirement, according to finance professionals.
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Homeowners have around £9 trillion saved in bricks and mortar, yet many families and pensioners struggle financially when they could access some of this money with a remortgage or equity release.
Although one in three financial experts believe many could benefit from equity release, opinion is divided over whether this route would provide an advantage to consumers.
The government was blamed for not promoting equity release as a financial solution, leaving many pensioners asset rich with valuable homes but cash poor, with low incomes.
The arguments were made at the first Great Retirement Money Debate, organised by the Equity Release Council at the Royal Society of Medicine.
Split opinions
The forum was attended by 150 organisations, including financial advisers, charities and think tanks.
Chairman Paul Lewis, of BBC Radio 4’s Money Box programme, took a vote which saw 84% of the financial experts attending call on the government to increase awareness of equity release among the retired as an option to boost their retirement income.
Opinion was split on how future generations will view pension freedoms introduced on April 6, 2015.
A third felt many over 55s will be tempted to spend their cash too quickly and that pension freedom has opened a door for fraudsters and investment scams.
Nearly half felt the measure was a good option for many retirement savers, while the rest felt that pension freedom would be thought of as a non-event in 10 years.
Changing attitudes
Nigel Waterson, chairman of the Equity Release Council, said: “The last government spent a lot of time and effort overhauling pensions.
“They now have to change attitudes to saving so more people save more money from a younger age. Average pension pots are just too small to support an aging population which is living longer and will probably need more expensive long term care.”
Waterson told the forum that the average private or workplace pension pot was just £25,000 and many retirement savers will have to rely on the State pension to supplement their incomes.
“The new government cannot rest on its laurels,” he said. “People have to look at the wealth locked in property and change the way they think about passing on their money to their families and loved ones in favour of looking after themselves.”
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