Norwich Union, part of Aviva, this week held a round table - to celebrate its 10th anniversary in the equity release market - the great and the good of the sector gathered to debate the future of this market at 76 Portland Place in London.
- Call for government involvement in the sector
- Equity release set to become standard part of retirement planning
- Sector to see significant growth
Norwich Union, part of Aviva, this week held a round table - to celebrate its 10th anniversary in the equity release market - the great and the good of the sector gathered to debate the future of this market at 76 Portland Place in London.
Panellists included Anthony Rafferty (Norwich Union), Dean Mirfin (Key Retirement Solutions), Dominic Fraser-Smith (Norwich Union), Tim Loy (Age Partnership), Mervyn Kohler (Help the Aged), John Malone (Premier Mortgage Service) and Laurie Edmans (Safe Home Income Plans - SHIP)*.
One of the most significant issues covered was the panellists' call for the government to become actively engaged in this market and work to educate consumers as to the benefits these products offer for retirement income and care funding.
Anthony Rafferty, Norwich Union, said: "We can certainly see the government becoming more involved in this sector - potentially underwriting the no-negative equity guarantee offered by SHIP members and working with providers, intermediaries and consumer groups to boost take up of this product."
This comment was backed up by Dean Mirfin, Key Retirement Solutions, who said that through his work with key influencers, he believes: "The government certainly has an appetite to become involved in this sector but how is the question?"
Mervyn Kohler, Help the Aged, highlighted the fact that: "Government policy is used to encourage consumers to do the things they want them to do and a key issue is currently funding social care. If the sector can show how equity release can solve this problem then I believe there is a real chance they will become involved."
Going forward, the panel concluded that equity release would become a "standard" part of retirement planning. However, they also said that while equity release could certainly form part of the solution to the pensions' crisis, it was not the only solution.
Dominic Fraser-Smith, Norwich Union, explained: "Many consumers have no pension, high levels of personal debt and will face substantial pensioner inflation so I definitely see equity release becoming a standard and important component of retirement planning in the future."
John Malone, Premier Mortgage Services, continued: "It would seem insane to discuss a person's funding for retirement and ignore the potential of their largest asset - their house - so it is natural that the equity release market will grow."
Laurie Edmans, SHIP, supported this statement saying: "Considering whether equity release is appropriate should be a standard part of the financial advice process for people at or in retirement. It is not right for everyone, but should always be properly evaluated."
The debate concluded with panellists offering their views as to how the market would grow in the next 10 years. All agreed there would be significant growth and - market leader - Norwich Union foresaw that sales could double to £2.4bn** over five years.
Tim Loy, Age Partnership, said: "With the expectation of a low interest rate environment and increased pressure on older people's finances, we could really see equity release take off as a product range. This will see an increase in specialist intermediaries as well as solicitors."
John Malone supported this view saying: "By 2020, there will be a major problem in pensions and equity release will help to bridge this gap. I also see it playing a key part in financing long term care in the next five to ten years."
Mervyn Kohler, Help the Aged, concluded: "The care requirements of the UK population are changing significantly - in the future we will see more people living alone with more age related specialist needs - equity release is certainly one of the ways this type of care can be financed."
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* The panellists at the Norwich Union Equity Release round table were:
- Anthony Rafferty, head of marketing, post retirement, Norwich Union
- Dean Mirfin, business development manager, Key Retirement Solutions
- Dominic Fraser-Smith, group product manager, equity release, Norwich Union
- John Malone, managing director, Premier Mortgage Service
- Laurie Edmans, non-executive chairman, Safe Home Income Plans (SHIP)
- Mervyn Kohler, special adviser, Help the Aged
- Tim Loy, chief executive, Age Partnership
** At the end of 2007, the total value of equity release sales for that year reached £1.2 billion. Norwich Union believes that in five years time (2013), the market will double to £2.4 billion worth of sales per year.
For further information on the debate or Norwich Union or to talk to any of the commentators, please contact:
Norwich Union
David Gwyer 0207 662 0550 / 07800 693187
Sarah Poulter 01904 452828 / 07800 691569
The Wriglesworth Consultancy
Lee Blackwell / Karen Butcher/ Zara Hosford
Telephone: 020 7427 1400
E-mail: l.blackwell@wriglesworth.com
Notes to editors:
About Norwich Union
Norwich Union is the UK's largest insurer. It is a leading provider of life, pensions and investment products and one of the largest financial adviser (FA) providers. FAs provide over 70% of the company's long-term savings business in the UK.
Norwich Union is the UK's largest general insurer with a market share of around 14%, with a focus on insurance for individuals and small businesses.
Norwich Union's news releases and a selection of images are available from Aviva's internet press centre at www.aviva.com/media
Equity Release - Yesterday, Today and Tomorrow - A Retrospective of the Ten Year Trends and Forecast into Future Developments
This report was compiled using information from over 80,000 Norwich Union customer records and all data contained therein is company specific unless otherwise indicated. All predictions are those of Norwich Union only and are dependent on market factors as outlined in the report.
About equity release
Norwich Union is the leading provider of equity release plans in the UK. Source SHIP
Equity release is a way of unlocking some of the capital in your home and turning it into cash - without having to move. Norwich Union offers three types of equity release plan. These are known generically as:
- Lifetime mortgage: A loan secured against your home, with no regular repayments to make as the loan and interest are rolled up and usually repaid when you die or if you need to move into long-term care.
- Home reversion plan: Enables you to sell all or a percentage of your home in return for a cash lump sum.
- Lifetime mortgage including a drawdown option: A lifetime mortgage that enables customers to unlock some of the value in their home by releasing an initial amount of money and keeping a reserve fund available that can be released in future when required.
Taking a lump sum plus our costs will reduce the value you have in your home potentially to nothing and therefore any inheritance you leave. You tax and welfare benefits may also be affected.
This is a lifetime mortgage or a home reversion plan. To understand the features and risks, ask for a personalised illustration.
SHIP membership
Norwich Union is a founder member of SHIP (Safe Home Income Plans), a group that was launched in 1991 and is dedicated entirely to the protection of planholders and promotion of safe home income and equity release plans. All participating companies are pledged to observe the SHIP Code of Practice.