Guest Blog: Andrea Rozario – Director General of Ship
You can hardly open a newspaper without being confronted by the issue of insufficient retirement savings and the effects that increased longevity has on this issue. Whether it is the Daily Mail “A Generation in Denial”, City AM “Golden Years of Retirement Turn Sour“ or - the somewhat more subdued - Financial Times “Insurer Warns on Pensions Savings” – everyone agrees that the future is looking less than bright for those hoping to retire. However, while most people agree that there is a problem, there is significantly less agreement as to what the solution might be.
Indeed, each organisation has its own favourite solution as well as a list of those it vehemently opposes and objects to. So, how can we solve this issue? Well, I think we need to remove ‘knee-jerk’ reactions from the equation and look at how each of these possible solutions could work together and then come up with some clear guidelines for consumers. This sounds terribly simple but unfortunately this is not what is currently happening.
A case in point is the current benefits clarification campaign that SHIP is running. We believe that many consumers do not consider using equity release to improve their finances in retirement due to their own (and advisers) uncertainty as to how it might or might not affect their benefits. Therefore, we are asking advisers for their views on this issue, in the hopethat we can provide solid evidence which encourages the Department of Work and Pensions to issue clear definitive guidelines.
As most organisations in the ‘retirement space’ agree that the over 55’s have significant amounts of equity in their homes, it seems ludicrous that this issue has not been tackled before. However, the interaction between benefits and equity release is not the only grey area in the ‘retirement space’ so rather than this type of situation being an exception, it is often the rule.
So, to really solve the retirement funding problem, we need to look at how these various solutions can interact and clear any shades of grey. But who is we? This might seem a strange question but the responsibility for assisting consumers with their retirement planning needs falls squarely between the Government, third-sector and business – a point which is often over looked.
The Government needs to provide the best-value solutions for all its citizens, the third-sector is looking to assist those who often need help the most and businesses are looking to provide profitable but viable options for customers. Therefore, while each has a different objective, they have shared goals and ultimately clarification of certain aspects of retirement planning would benefit each party.
Thus, to combat the problem of insufficient retirement savings against increased longevity, we need to work together to weigh up the merits of each funding solution, assess how they can work together and then issue clear guidelines. This is happening to a certain extent but further engagement is essential and we all need to accept the limitations and objectives of each party and begin work on solutions.
So to paraphrase Elvis with “a little less conversation and a little more clarification” perhaps the future of retirement would not seem so bleak.
Andrea Rozario – Director General of Ship