Push for reverse mortgages to fund retirement
A peak industry body for the equity release market is pushing for an industry-wide framework for its members, government, and non-member providers of reverse mortgage products to address the savings shortfall in retirement.
SEQUAL chairman, Peter Szabo, claimed demand was rising for reverse mortgage and equity release solutions, and said that the industry body's goal was to develop industry professional standards and code of conduct under which members could abide by the Consumer Protection Principles when carrying out their activities.
While he welcomed the fact that the importance of superannuation was being highlighted by all political parties, this would not be sufficient in funding older Australians through retirement.
"Put simply, the implication of living longer with rapidly escalating cost of living and health charges is going to erase any superannuation, savings, and investments of so many retirees long before they need to seek aged care services or die," Szabo said.
He also said products like annuities only funded retirees for the short-to-medium term, which would then lead to pre and current retirees turning to untapped wealth in their family homes to fund their retirement when products like annuities expire.
"When an elderly retiree, arguably at their most vulnerable, faces decisions about utilising the family home to access equity to enable them to live beyond their savings and superannuation, they are owed the very highest duty of care by financial service product providers and the financial service sector in general," Szabo said.
The push for reverse mortgage came as financial services consultant, John Wiseman, recently warned retired Australians would increasingly demand different solutions to fund their retirement, and unlocking wealth in the family home might be one of them.
But he also warned there were limited appropriate reverse mortgage options available.
AUTHOR
Malavika Santhebennur
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