Speaking at its annual public meeting in Edinburgh, the first time the event has been held outside of London, chief executive Nikhil Rathi (pictured) laid out the affordability challenges that those approaching retirement face.
He said: “This year, I would really like, and the team would really like, to make significant progress on later life lending.
“We have a big issue in the UK with defined benefit (DB) pension transfers phasing out.
“A large generation of people who are retiring will have defined contribution (DC) pensions and housing wealth, and their state pension probably won’t be enough alongside the DC pension to secure the living standards they would like.”
Earlier this year, the Pensions Commission found that 15 million working-age adults will not have the retirement income they aspire to, which is two-thirds of pre-retirement earnings.
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In addition, research by consumer group Fairer Finance suggested that by 2040, 51% of households aged 60 and over could benefit from accessing their housing wealth in retirement through later life lending. It is estimated that their housing wealth will total £4.3trn.
Rathi continued: “We need to find ways of unlocking housing wealth and getting over the scars of equity release of the past but also protecting against potential abuse by relatives of their elderly family members.
“We do think we can crack it, but it’s not going to be straightforward.”
A consultation that examined the affordability of retirement interest-only (RIO) mortgages closed on 28 July, with feedback and a policy statement due in the second half of the year.
Alongside this, the Later Life Mortgages Market Study – which examined how the market was meeting consumers’ needs and where the current system is failing – was conducted, with interim findings expected in Q4.
