Dr Louise Overton is associate professor of social policy and director of the Centre on Household Assets and Savings Management at the University of Birmingham. During the plenary she described housing wealth as a “double-edged sword” for younger generations.
She said “The transition from defined benefit to defined contribution pensions marks a significant shift in how retirement income is structured. Significant pockets of exclusion remain where freelancers and the self-employed are concerned and they will face challenges boosting their retirement savings and income.
“In 2022, the Financial Conduct Authority Financial Lives survey reported that 32% of self-employed individuals lacked any private pension provision. This is partly due to the irregular income and lack of employer contributions that characterise freelance work. For these individuals, planning for retirement often takes a back seat to managing day-to-day financial stability.
“Despite similar savings rates between men and women, a persistent gender pension gap remains a pressing issue. Women often end up with lower retirement savings due to career breaks, typically for childcare, and the gender pay gap. This discrepancy is a significant policy concern, as it may result in higher rates of old age poverty among women and increased demands on social care systems.
“Women are more likely to have lower levels of wealth and greater financial insecurity than men. Ensuring that women can achieve adequate retirement savings is crucial to addressing these future care needs and reducing economic vulnerability.
“Young adults face a host of challenges when it comes to retirement savings. Labour market insecurities, longer educational careers, substantial student debt, and rising housing costs all create challenges to save. Despite the benefits of automatic enrolment in pension schemes, these socio-economic factors make it difficult for young people to prioritise retirement savings. Additionally, the prospect of using housing wealth to supplement retirement income is problematic due to the uneven distribution of housing wealth and the delayed entry into homeownership among younger generations.
“While leveraging housing wealth for retirement income could offer a solution, it is not without complications. Housing wealth is highly unevenly distributed, and younger generations face delayed entry into homeownership and longer mortgage terms. This situation creates a ‘double-edged sword’ where housing may either provide financial security or exacerbate retirement income inadequacy, depending on individual circumstances.
“There has never been a greater need for flexible, accessible, and affordable retirement income products, and in that, I mean lifetime mortgage products.
“These need to adapt to the changing needs and circumstances of individuals who have to manage their income and assets over a longer period than previous generations. The sector must continue to prioritise product innovation to meet the evolving needs and objectives of existing and potential consumers of later life lending.”
Roland Whyte, CEO of tech-firm Nokkel said:
“Whilst relative newcomers to the equity release industry, we have a deep understanding of the broader retirement sector. This, we feel, gives Nokkel a fresh perspective on how some of the industry challenges can be solved. 
“First and foremost, later life lending is a great solution. The reference to solution instead of product is intentional as that is what it is. So what are we doing at Nokkel?
“We integrate residential property into a financial advisers’ holistic view of their client’s property wealth. We help advisers understand how they can support their clients unlock this wealth. Historically, there has been limited innovation in the financial advice channel which may be the reason later life lending hasn’t been as widely used as it should be. Having the right technology in place should help unleash a great product – where else can you secure a large loan that you don’t have to repay in your lifetime that doesn’t cost you anything in cash terms and with funds readily available for sensible spending.
“The retirement equation should be relatively straight forward one to solve. How much wealth do you have, how much of this do you need to fund retirement and what would you like to leave in your estate, if anything. Property is a significant component of wealth and therefore an important part of the equation. Why wouldn’t you unlock property wealth if you either need it to fund your retirement or if there’s surplus wealth available. Not everyone plans to leave an estate, so unlock it and enjoy it, or the taxman will.
“If you can answer these questions, you will see how valuable a later life lending in retirement really is. Innovation starts with customer needs.”
Andrew Gilbert, Product Director, Legal and General Home Finance said:
“Innovation, for me, starts with the customer need. Most people see their pension accumulate over time and see it as being there to fund their retirement. However, many people do not look at their property in the same way.
“For some people, equity release was traditionally associated with some sort of failure in their financial planning, and we are trying to overcome that. It is a mindset we are seeing shift with it increasingly becoming more normal and openly discussed as a positive life enhancing decision.”
“More than 39 million people have never engaged with a financial adviser and for our products, we require financial advice as part of our process. So again, there is a mindset shift that is integrally aligned with trust and value that we as need as a sector and industry.
“The polarisation of advice when people really need a holistic retirement plan makes that even harder. The average age that people inherit wealth is now 61. That is quite late to be handing over their property.”
