TISA reveals over two-thirds are under-saving for retirement leading to a Later Lifetime Lending sector boom
TISA reveals over two-thirds are under-saving for retirement leading to a Later Lifetime Lending sector boom
TISA, the UK’s cross-industry financial services membership body, has identified that two thirds of people aged 50-65 in the UK were under-saving for retirement before the COVID-19 pandemic. Recent market falls have resulted in personal losses and financial disruptions exacerbating this problem, which is accelerating the need to borrow during later life.
The Later Lifetime Lending sector is becoming more important than ever and is expected to grow to more than £500bn within the next 10 years. The market will continue to grow as people live longer. While many homeowners will be relying upon the equity in their homes to help finance their retirments, increasing numbers are becoming homeowners later than previous generations, or will not become homeowners at all. This is detrimental, as TISA’s recent research has found that renters deplete their pensions 12 years before homeowners.
TISA is calling on the industry to proactively – but more importantly – holistically address the growth and importance of this market to better suit the needs of the increasing numbers of people who need to borrow later in life and to develop a new advice model to include later lifetime lending as an integrated part of retirement planning and all matters relating to financial wellbeing for individuals and families.
Ruth Moore, Executive Director at TISA, said: “The industry has recognised the need for better Later Lifetime Lending products and services and has responded with the innovation and expansion of choices to meet consumers’ needs. But more needs to be done to fully support the growth of borrowing in later life if we are to prevent old age poverty and a reliance on the State Pension, which simply isn’t enough to live a fulfilling life. People are living longer, with higher levels of debt and lower levels of pension income, coupled with rock bottom savings returns.
“With increasing product complexity, we will need to strengthen safeguards against potential customer detriment as well as expanding and enhancing adviser knowledge and qualifications; something that the FCA’s recent review of the equity release sales and advice process highlighted.
“We will work with the industry to convene senior cross-sector groups to address these issues and deliver consumer focussed outcomes, including aligning advice that consumers receive and using open finance and other financial technologies to further empower consumers.”
TISA is hosting an Open Meeting on 13th October for the industry to discuss how it can drive meaningful change and realise the initiatives outlined.
Simon Thompson, CEO of Key Group, commented: “Key Group is delighted to be supporting TISA’s initiative to form a collaborative group of companies all prepared to look at how housing wealth can play a more cohesive role in retirement finance. It’s well documented that property wealth is seen as the answer to a whole range of consumer and societal issues, whether it be paying for care, the deposit for a family members’ first home, providing income or repaying debt, the equity held in a consumers’ home is being ring-fenced as the solution.
“In reality whilst housing equity can undoubtedly play a role in meeting those consumer needs it won’t be as effective as we believe it can be unless we as an industry take a different approach and start to talk about how we include housing equity as an integral part of the retirement planning process. Key Group believes that developing a more holistic approach is critical to delivering the retirements our clients are looking for and welcome the work TISA has commenced to deliver this aim”
Jason Hurwood, Director of Investments, Insurance and Protection at Nationwide, commented: “We welcome TISA’s efforts in convening the industry on this issue. The need to access the value locked in our homes to help fund our lives in retirement will continue to grow. As it does, lenders must do more to make their products as safe and transparent as possible so there is greater clarity and confidence from a customer perspective. The advice process is every bit as important as the product itself and collectively we need to get it right.”