It is calling for action in next week’s Budget which is already expected to deliver higher Inheritance Tax thresholds along with cuts to lifetime pension allowances and possible changes to salary sacrifice rules.
more 2 life warns that retirement savers cashing in pension funds are risking unnecessary tax bills which they could avoid if they factor in property wealth to retirement planning.
The lender’s own research shows more than two out of five (41%) homeowners in the run-up to retirement already consider their property wealth as part of their retirement planning and believes including property in Pension Wise guidance is crucial to the success of pension freedoms.
Additionally, it forecasts strong growth for equity release and other retirement lending solutions as part of a “seismic shift in the way people fund their retirement”.
Its research shows 17% of over-65s expect to borrow or have already borrowed money in retirement. Figures from the Financial Conduct Authority suggest there will be 40,000 interest-only mortgages maturing each year between 2017 and 2020 where the borrower is aged 65 or above. Approximately £5.5bn of mortgage loans will mature during this period where the borrower has no means of fully repaying the debt owed.
Dave Harris, managing director at more 2 life, said:
“Pension Wise has a vital role to play in delivering success for pension freedoms but there is a huge missing piece of the guidance jigsaw.
“The £1 million inheritance tax threshold is widely expected in the Bonus Budget and coupled with changes which enable savers to leave pension funds free of tax means property wealth needs to be a major part of the retirement planning discussion.
“Pension Wise’s narrow focus on defined contribution funds misses the fact that many people have funds of between £30,000 and £40,000 but also have homes worth many times that.”
