Equity release

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Equity release

• Chair Roger HillierHead of Equity Release
  Product Development, Partnership Assurance
• Andrea RozarioDirector General, SHIP Equity
  Release

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The Changing Face of Equity Release

• Andrea Rozario
• Director General
• SHIP Equity Release

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Outline

• Changing Society.
• The Demographic Revolution.
• Wealth Distribution.
• Other Changes.
• Long Term and Domiciliary Care Issues.
• Product Innovation.
• Excellence in Equity Release.
• Next Steps.

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What does the changing face of Society Look Like?
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The Demographic Revolution.

• The number of people aged 65 and over will
  increase by 47 by 2026.(Wanless. 2006).
• People aged 85 or over will increase by 86 over
  the same period. (Wanless. 2006).
• There are more people over 65 now than there are
  teenagers. This is a first!

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Wealth Distribution.

• According to the Wanless report on care, some 45
  of the current retired population of home-owners
  have inadequate retirement income (Poole, 2006, p
  24).
• Last winter over 25,000 people aged over 65 died
  of cold related illnesses.(Age Concern 2008).
• Nearly a fifth of pensioners are living in
  poverty. (Kings College London 2008).
• UK has lowest state pension in the developed
  world. (Dr Ros Altman)

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Wealth Distribution...

• However...
• Baby boomers have more wealth than any generation
  before them at the same age.
• Baby Boomers now hold 80 of the UK wealth.

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Dont Pigeonhole People!
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Other changes...

• Increase in single households.
• Childless Pensioners.
• Rise in levels of divorce amongst those aged 60
  and over.
• Children later in life Sandwich Generation.
  23 currently support children and elderly
  parents

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Other Changes...

• Poor pension provision or impact of current
  economic climate on value of pension and
  investments.
• Longer working lives. 61 of pensioners are
  expected to carry on working past retirement
  and not just because they want to. (Aegon report
  2008).
• Increase in levels of debt in those aged 60 and
  over.
• Expectations, attitudes....

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Baby boomers with attitudes...
Grandad olescent!!!
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Long Term Care... NO THANKS!

• The use of Equity Release to pay for care in the
  home is likely to increase as people would rather
  stay in their own home and pay for help.

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LTC and Domiciliary Care.

• Long Term Care in the UK can cost as much as
  75,000 per year, the average is 32,000 per
  year. (Saga April, 2007).
• This stands at five times more than the average
  annual cost of receiving care in the home, at
  6,846.
• The average person has 11.6 hours home care per
  week and the average price for a daytime hour of
  privately purchased care is 11.35.
• 150,000 people purchase care at home privately
  (UKHCA, Overview of UK Domiciliary care sector,
  May 2008)

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The Role of ER and Domiciliary Care

• Longer life span coupled with longer need for
  care.
• Choices for people facing the need for care.
• Link between need for care and lower incomes.
• Flexible products.
• Market innovations.
• Govt involvement?

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Product Innovation

• Facility to take regular monthly sums guaranteed
  for life.
• No ERCs on some products.
• Enhanced amounts for impaired lives.
• Facility to take small regular sums on an ad hoc
  basis if required, from as little as 2000.00.

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Product Innovation

• Some reversion plans will offer full market value
  for the percentage of property sold, with an
  increasing share over time.
• Early vacancy guarantees and house price
  inflation guarantees provided with some
  reversions.
• Option to release equity on other property held.

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Excellence in Equity Release

• Comprehensive guidelines PEER. AIFA/AMI. ABI
• SHIP checklist for advisers and clients to use.
• FSA Regulation. Rights to redress.
• FSA Brochure for customers.
• Broker support from SHIP members

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Excellence in Equity Release

• For SHIP Members there are many safeguards in
  place i.e.
• No-negative equity guarantee.
• Fixed or capped interest rates.
• Independent legal advice is insisted upon.
• Qualified advisers.

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Excellence in Equity Release

• Fully advised process.
• Security of Tenure for the client.
• Clear easy to understand plans with explanation
  of pros and cons, costs and projections. KFI.
• Ability to move with no financial penalty.

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Next Steps

• Get a foothold in the market now!
• Ensure qualified with correct permissions from
  the FSA.
• Check guidance available from various sources
  including PEER. AMI/AIFA FSA etc.
• Work out a marketing plan.

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Next Steps

• Make sure you are aware of support available for
  guidance on state benefits and tax. i.e. software
• Utilise all the resources to hand i.e. free
  brochure from the FSA.
• Get in touch with BDMs from all SHIP providers
  or ask for intermediary support.
• Do your research, check what the differences are
  with the products.

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Next Steps......

• Have confidence in your professional abilities
  and ensure you are rewarded for your expertise.
• Keep records!
• Build relationships with local professionals such
  as solicitors, accountants etc.
• Obligation to have an understanding of all
  options open to clients.

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Thank You
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Thanks to all our sponsors