Almost half of Britons are unsure what equity release is, and are therefore unaware of how it could provide a solution to the retirement funding crisis, according to research from SHIP.
Confusion about equity release as an option for providing retirement finance is rife among the British public, the study has revealed; nine per cent wrongly think that it is the same as a remortgage, 32 per cent believe it to be a form of sale-and-rent-back, while 14 per cent of people claim never to have heard of it.
The reason behind this knowledge blind spot could be the number of people who do not seek financial advice, choosing instead to go solo when it comes to planning how they will fund their retirement.
Only eight per cent of Britons regularly consult and independent financial advisor, 32 per cent use the internet to source financial advice, and 73 per cent say they intend to plant their retirement without seeking any at all.
SHIP (Safe Home Income Plans), the equity release trade body, carried out the research to gain a greater understanding of what people expect from their retirement and how they intend to fund it.
The study discovered that while the majority of people expect to enjoy a high standard of living when they retire, 23 per cent say they have a pension but it will not be enough to retire on, and 35 per cent have no regular pension at all.
Commenting on the findings, Andrea Rozario, director general of SHIP, said: "It is interesting to note that although 73% of Britons consider that they are responsible for their own retirement finances, so few are regularly consulting financial advisers to ensure that they are making the most of their money.
"The findings show that without consulting an IFA, consumers are likely to miss out of the full spectrum of retirement planning products. There seems to still be some uncertainty about the definition of equity release, but SHIP is working hard to increase consumer understanding of the product, Financial advisers can help to play a key role in developing and expanding the industry."
Research carried out last year by equity release provider LV= found that a quarter of people over 50 expect to rely entirely on a state pension to fund their retirement, whilst also expecting to be able to spend more once they retire.
Meanwhile, 16 per cent intend to use equity release to unlock value from their home and fund their retirement.
Vanessa Owen, head of LV= equity release said "The recession has had a big impact on the personal wealth and pension pots of the over-50s, but for many their home is still a big part of their retirement income plans."
© Fair Investment Company Ltd
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