One in three of the over-55s would prefer to use property wealth to fund retirement before accessing their pension funds due to the tax treatment, new research has found.
According to equity release lender more 2 life, the launch of pension freedoms has led to a shift in how savers look at retirement planning and income sources.
In a poll of 1,060 adults, more 2 life found that 28% of retirement savers would welcome the ability to borrow against the value of their pension funds.
Following the pension reforms introduced in April, property wealth accessed via equity release is tax-free compared with pension income, while pension funds can be left tax-free or subject only to marginal income tax rates.
Equity release is designed to help those over 55 get access to the wealth tied up in their property without having to sell it or move to another home.
Dave Harris, managing director at more 2 life, said tax efficiency of using housing wealth alongside pension savings was becoming clearer now that pension freedoms are up and running.
He said: “It is likely that traditional retirement income products will be replaced – or at least complemented – by new investment strategies as savers look to maximise the returns from all their assets including property wealth and pension funds.
“Retirement lending needs to be addressed as part of that and it is a real growth opportunity for lenders and advisers which will genuinely benefit customers. With just 12% of over 45s confident they will not face an income shortfall in retirement individuals will need to look at all their assets to fund their retirement comfortably.”
