Bower Retirement Services has revealed the proportion of customers using equity release to boost inadequate pensions has more than doubled in the first three months of 2015, with more people using it to supplement their pension income.
Almost three quarters (70 per cent) of equity release advisers expect the market to continue to grow over the next six months, despite the short-term effect of the new pension freedoms.
The proportion of customers choosing equity release to boost inadequate pensions has more than doubled from 6 per cent in the fourth quarter of 2014 to 14 per cent in the first quarter of 2015.
This supports statistics published this week by the Equity Release Council which showed that the new pension freedoms have increased the appeal of equity release, with total lending in the first quarter of this year growing 3 per cent to set the largest first quarter lending total on record.
The latest poll by equity release adviser Bower found most reasons for releasing equity have remained fairly stable over the last six months, with debt consolidation the most common motivator (42 per cent). The percentage of those accessing property wealth for home improvements has dropped slightly to 15 per cent (from 17 per cent).
The number of individuals quoting the cost of living as a reason for accessing their property wealth has dropped from 17 per cent in the fourth quarter of 2014 to just 11 per cent in the first quarter of 2015, the same percentage as those using equity release to give a gift to their families.
Additionally, 60 per cent of advisers report they are seeing younger clients enquiring about equity release.
Geoff Charles, chief executive of Bower Retirement Services, said: “Advisers do expect the recent introduction of the pension freedoms to have some effect on the equity release market and expectations are still that the market will continue to grow over the long term.
“All the discussions around what options people have in retirement is raising awareness for all types of solutions.
“We shouldn’t forget that there is a sizeable slice of people who are unable to access their pension pots, even under the new pension rules; those with final salary or ‘defined benefit’ pension schemes.
“For these people, who aren’t able to drawdown any part of their pension pot apart from the initial tax-free lump sum, equity release could be well worth considering, depending on their circumstances.”
Nigel Waterson, Equity Release Council chairman, said earlier this week that the new pension reforms have brought the topic of financial planning for retirement firmly to the fore and “we hope this encourages people to seek financial advice to discuss the many options available to them, of which equity release is one”.