Equity release as funding tool for care not fully explored by Government

14 November 2009 / by Rachael Stiles

Responding to the Government's Green Paper on the future of care for the elderly, SHIP - equity release trade body – has said that the Government has not gone far enough to explain all of the options available for funding retirement.

The Government's consultation on care, which ended yesterday, should have provided a more exhaustive review of funding options such as equity release, said Andrea Rozario, director general of SHIP (Safe Home Income Plans).

Ms Rozario welcomed the review, which she said is part of the process of improving the UK care service for the elderly, and she said SHIP was glad that the Government has decided not to significantly increase the tax burden on all UK citizens to fund care for an aging population.

But, while SHIP agrees that the system needs a review, Mz Rozario said, it does not necessarily agree that the Government's Green paper "provides a comprehensive overview of funding options - including equity release."

"Under the current system with its maximum asset limits, some older people have been forced to sell their homes in order to fund their care needs. This is a problem we believe will continue under some of the funding proposals in the paper and one that we believe equity release could help with," Ms Rozario said.

Equity release allows the older generation to make the most of what is likely to be their largest asset – their home – in which 80 per cent of this generation's wealth is held.

Furthermore, equity release also offers older homeowners a wider choice of care options by proving additional funding, Ms Rozario added:

"Delivering a simple effective method by which those entering long term care can access an equity release scheme with all the safe guards and rights that people currently receive from products offered by SHIP members is something that is worthy of serious consideration.  

"We hope that the Government will take this opportunity to work with the private sector to develop workable solutions to the very real care funding crisis the country faces."

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