Inclusion of housing wealth will allow savers to better plan their retirement, argues the Equity Release Council.
The Equity Release Council has called for the housing wealth of savers to be included in pension dashboards.
It argues pension dashboards should give savers access to “a complete overview of their accumulated assets to make the best decision when planning how to fund their retirement”.
Principally, it wants dashboards to include the value of their property to be shown on the dashboard alongside their pension pots, allowing savers to assess whether or not to draw upon their property wealth to fund their retirement.
But this raises questions as to the scope of the dashboard, which is designed principally for looking at all an individual's pension pots. Including assets such as property could potentially lead to the inclusion of a wide variety of other wealth such as Isas, or even valuable possesions.
This would turn the pensions dashboard into a 'wealth dashboard' - not its intended purpose. It is also unclear how the value of an individual's property could be measured and kept up to date to maintain an accurate outlook.
With many approaching retirement lacking adequate savings, property wealth has become an increasingly popular way to fund retirement. With equity release, it is possible to borrow against the value of your home, sell it or part-exchange it for a lump sum or a regular monthly income.
Last year, according to the Equity Release Council, those aged over-55 released 50p from the value of their homes for every £1 of savings accessed via flexible pension payments.
Meanwhile, in 2017, the total amount of housing wealth unlocked by over-55 homeowners reached £3.06 billion.
Therefore, it argues, the inclusion of accumulated housing wealth within pension dashboards will mean “consumers are better able to plan how this equity can be used to support their retirement.”
In a letter to Guy Opperman, the pensions minister, David Burrowes, chairman of the Equity Release Council, stated: “Life expectancy and standards of living have grown for the generations now nearing retirement, and there is a danger that many of this generation have inadequate savings to cover an unaccounted-for period without income.
“Equity release provides an important option to meet this shortfall. In order for individuals to make an informed choice, it is key that they understand the true value of their housing wealth and we would therefore welcome this asset class included in the dashboard.”
Online pension dashboards have been mooted for some time, but are expected to finally get up and running in 2019. Concerns ahead of launch, though, have been raised about safeguards for consumers.
Under current government proposals, there will be privately run for-profit pension dashboards operating alongside a not-for-profit online platform.
The concern is that private dashboards could present information encouraging action from consumers that while profitable for the company running the platform might be inappropriate for the user.
Moreover, state pension data will not be available straight away. This has attracted criticism, most notably from former pension minister Steve Webb, who is now director of policy at Royal London.