Pensions - Articles - Solvency II proposals could hinder equity release market

 Innovation and competition in equity release markets across Europe could be held back by current Solvency II proposals, impacting on pensioner income in future decades, says Just Retirement.

 
 Stephen Lowe, Just Retirement’s group external affairs and customer insight director, backed the conclusion of Towers Watson’s latest report Accessing housing wealth in retirement that equity release assets should be included in Solvency II funding calculations.

 
 “Europe faces rapid growth in the number of retirees and many will not be able to fund and adequate retirement from pensions and savings alone,” he said. “Equity release can help but the market needs to be allowed to develop in terms of competition and innovation.

 
 Policymakers in the UK are starting to take equity release more seriously as a solution to pensioner income shortfalls, but the new report shows many European countries such as Germany, France and Sweden could benefit even more from a flourishing market.

 
 “The Towers Watson report highlights the fact that currently equity release loans will not count as a ‘permitted asset’ towards Solvency II capital provisions which will deter insurers from entering and helping to develop the market for the good of the clients.

 
 “The common sense view is that equity release loans are very different to standard mortgages and insurance companies are best placed to understand key risks such as changing longevity. We strongly support Towers Watson call for a rethink on this issue.”