Old need advice

Conveyancing Month!

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The UK’s first monthly on-line journal dedicated to conveyancers!

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Text Box: In last month’s issue, we reported on the growing trend for elderly people to rely on their homes to provide them with a pension in later life. As the gap between pension need and pension provision continues to grow, this trend is bound to gather pace, and solicitors will need to be able to offer - and get paid for - good quality advice. This view has been re - enforced by a new report issued by the Institute for Public Policy Research, which points out that there are nearly a million ‘asset-rich income-poor’ pensioners - who have more than £100,000 of equity in their homes, but are on means-tested benefits. Furthermore, half of retired people living on less than £128 a week (the official definition of poverty) have three or more spare rooms. According to Jim Bennett, IPPR head of social policy, this particular group of pensioners are “living in big houses, but on small incomes. Because of the complexity of the benefits system, many pensioners are unaware of exactly how their benefits would be affected, and are unable to calculate whether they would be penalised”. The IPPR is a left leaning organisation, and so not surprisingly, Bennett urged a publicly funded, government led solution. “To help pensioners who want to release wealth from their home”, he said ”the Government could help by improving the availability of financial advice, ensuring that there is enough housing suitable for retirement and by helping older pensioners with the logistical process of moving. This isn’t about forcing people to sell their homes but about empowering them to make informed choices that are right for them.” However, and whilst we wait for the Department for Communities and Local Government (the ODPM as was) to “leap into action”, this is the sort of service that conveyancers could usefully - and profitably - provide. In support of their argument, the IPPR cited an exercise undertaken last year by the Financial Services Authority (FSA). They conducted a mystery shopping exercise with 42 Independent Financial Advisers (IFAs), product providers and mortgage brokers and found that 70 per cent of advisers did not gather enough information about their customers before offering them advice on equity release. Most advisers failed to discuss the terms and conditions of equity release schemes -52 per cent did not explain what would happen if the customer or their partner died or went into a residential or care home, and 57 per cent did not explain what would happen if the customer wanted to move house later. Yet 64 per cent said that the customer would be eligible or suitable for an equity release scheme and 83 per cent failed to ask about Pension Credit eligibility. There are 3,744 IFAs with relevant qualifications in lifetime mortgages. The FSA has made these qualifications compulsory for all newly-qualifying advisers offering advice on lifetime mortgages. IPPR’s analysis of the latest figures show that in 2002/03, about half of retired people living in poverty had three or more extra rooms, in addition to kitchens, bathrooms, a bedroom for the first two members of a household and a bedroom for each further member. Today, ‘living in poverty’ would mean an income of less than £210 for a retired couple, and £128 for a single retired person.

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Explanatory note

Explanatory note

Explanatory note

A million ‘asset rich income poor’

pensioners need

advice

As the gap between pension need and pension provision continues to grow, solicitors will need to be able to offer elderly clients - and get paid for - good quality advice about using their homes to maximise income.