EPPARG congratulates David Burrowes on his appointment as new Chair of the Equity Release Council


David Burrowes embarks on the role after serving as the Conservative MP for Enfield Southgate from 2005-2017. The transition follows an agreement made by Waterson and the board in 2014 for him to extend his initial term as the Council’s first chairman for an additional three years.

A strong campaigner for local and national causes, Burrowes has championed consumer protection on issues including legal and medical services, and led campaigns for improved social and end-of-life care.

He also worked on behalf of his constituents on issues relating to pensions and financial services products, working closely with ministers, regulators, banks and the Treasury Select Committee to protect consumer interests via active membership of a number of All Party Parliamentary Groups.

During his time in Parliament, Burrowes served as Parliamentary Private Secretary to three cabinet ministers, across the Cabinet Office and the Department for Environment, Food and Rural Affairs, and sat on the influential Home Affairs and Public Accounts Select Committees.
Burrowes also brings considerable legal expertise to the role having been shadow justice minister from 2007-2010 and a practising solicitor for 23 years.

He will formally take over from Waterson in December with the months proceeding used to ensure an orderly transition.

The equity release sector has seen a period of sustained growth, with trends suggesting it could surpass £3 billion in annual lending for the first time in 2017.

Part of this growth is due to the transition, overseen by Waterson, from SHIP (Safe Home Income Plans) to The Council in 2012. The remit of the trade body was expanded from representing providers to opening up membership to advisers, solicitors and other industry professionals.

The move helped boost the membership of the Council, which now stands at 646 individuals and 213 member firms, up from 20 firms that made up the membership in summer 2012.

The Council has also built an effective working relationship with government and regulators, as well as other areas of the financial services industry, as housing wealth is increasingly viewed on a holistic level within later life planning, while maintaining its strong focus on consumer protection.

David Burrowes, incoming chairman of the Equity Release Council comments: “As a society we face significant challenges in addressing the impact of an ageing population, rising social care needs and inadequate pension funds. While there is no one-size-fits-all solution, I firmly believe that equity release can play a major role in helping older people meet those challenges and improve their financial outlook in later life.

“I am excited by the opportunity to work on behalf of the sector and will put the best interests of the consumer at the core of our future work. I hope to use my experience gained in Parliament to further this cause and to build the profile of equity release with a diverse range of stakeholders across industry, government and regulators.

“I also commend Nigel Waterson for his service to The Council over the past six years. The equity release market has been strengthened during this period, buoyed by a growing membership and increased competition. I look forward to working with the board and engaging with those within industry as we build on the significant progress to date.”

Nigel Waterson, outgoing chairman of the Equity Release Council, said: “It has been a huge privilege to serve as the first Chairman of The Council and oversee its evolution since 2012.

“The momentum generated within the sector is testament to members’ continued commitment to innovation and the Council’s standards that have established a safe and reliable market for consumers.

“It is also clear that equity release is set to play an increasingly important role in financial planning for retirement as a growing number of older homeowners consider enhancing their retirement by unlocking housing wealth.

“With an excellent reputation to date as a dedicated campaigner, lawmaker and influencer, David has all the right attributes required to lead the Council on the next stage of its journey and I congratulate him warmly on his appointment.”

EPPARG congratulates BNI Europa Bank on launching the first equity release product in Portugal


Equity release in Europe has recently been boosted as BNI Europa Bank launched a new product on the Portuguese market in February 2017 called Cereja, the first brand of financial services for the “greater of experience”, is targeted at people aged 65 years or above. Due to increased life expectancy, health improvement and better literacy, BNI Europa Bank notes that there is now a more favourable environment for the development of new financial products for this age group. BNI Europa Bank is recognised as an innovative market player and has been awarded ‘Best Internet Bank 2016’ by the Global Business Outlook and ‘Best Digital Bank Portugal 2016’ by the Global Banking & Finance Review.

Reverse Credit is a new product in Portugal, inspired by the classic Reverse Mortgage and Equity Release products, which have been very popular in the USA and the United Kingdom. It is a financial product that allows the customer to release the wealth locked in its property, by using it as collateral (mortgage loan). The customer retains the ownership of its property. Portugal is thus joining a growing number of European countries, including Spain, France, Italy, the UK, Sweden and Poland, amongst others, which can demonstrate the social and economic benefits of supporting customers at the peak of their life experience in releasing capital from their homes to meet their daily needs and to greatly improve their quality of life.

The European Pensions and Property Asset Release Group (EPPARG) congratulates BNI Europa Bank upon the launch of Cereja and believes that it will bring greater choice and flexibility to the over 65s in choosing the right financial solution which suits their needs.

Pension reform, not E.U. capital rules, may influence U.K. insurer headquarters


The future profitability of the pensions market will determine whether insurers keep their head offices in Britain rather than tougher new European Union capital rules, a top Bank of England official said Tuesday.

The E.U.'s new Solvency II rules come into force in January, and BoE Deputy Gov. Andrew Bailey said British insurers were on course to meet the deadline.

Legislators on the British parliament's Treasury Select Committee asked Mr. Bailey if the stricter E.U. rules would prompt some insurers to reduce their presence in Britain.

With a referendum on Britain's membership of the E.U. due before the end of 2017, British politicians are highly sensitive to any regulation that causes disadvantages to firms that do not use the euro as a currency.

"The bigger issue in the U.K. is what the retirement savings market is going to be in the future," Mr. Bailey said. "Arguably it looks more like an asset management industry in the future."

The British government has introduced reforms to pensions that allow people to cash in their pension pots rather than being forced on retirement to buy an annuity that pays out until death.

The net cash flow of traditional life insurance products in Britain had also been negative for the past eight years, Mr. Bailey said.

But the BoE — where Mr. Bailey heads the Prudential Regulation Authority, which supervises banks and insurers — is also concerned about how the new E.U. rules will work in practice in the early years.

Mr. Bailey said British insurers would initially be at a disadvantage to their eurozone rivals when firms begin reporting the new solvency ratios from January.

Eurozone insurers will be allowed to use a much higher interest rate yield curve than British insurers to discount future liabilities, creating a comparison that market analysts should not overinterpret, Mr. Bailey said.

Firms are already facing market pressure to show by how much their ratio surpasses the 100% minimum threshold.

"What we are interested in is that the firm has met the minimum standards," Mr. Bailey said.

"Some people say you have got to have a number that is 160 or 170. Well not in our book. In our book, it's they meet the capital requirements. I am not interested in the significance of individual numbers," he said.

The PRA has said that introducing Solvency II was its single biggest task this year.

"It's a more robust risk management system than has been there in the past," Mr. Bailey replied.

Pension Adequacy Report approved by EU Employment and Social Affairs Council


The 2015 Pension Adequacy Report has been endorsed on October 5th by the EU Employment and Social Affairs Council.

The report shows in its conclusions that EU’s pension systems can be expected to deliver adequate pensions to future generations of retirees provided strong policies to enable workers to stay in jobs until they reach the statutory pension age are pursued. Thus, employment policies should provide more possibilities for older workers to stay longer in the labour market. However, pension systems must also provide protection for those who are unable to remain in the labour market long enough to build up sufficient pension entitlements.

According to the report, for the EU as a whole, pensions currently provide most people with sufficient protection against poverty and adequate income security in old-age. Overall, older people in the EU enjoy living standards close to those of the younger population. The relative median income of people aged 65 or more comes to 93 percent of the income of those under that age. But it ranges from below 80 percent in eight Member States to above 100 percent in six Member States in 2013. In 2012, 14% of those aged 65 and over were at risk of poverty (i.e. disposing of less than 60% of the median income in a given country), compared to 16% for the rest of the adult population . But differences in poverty rates across countries are large, ranging from below five to 28% of the older population.

Pensioners have largely maintained their relative standard of living over the crisis, but old-age poverty continues to be a problem in some countries, particularly for women. While the risk of poverty increased for those below 65 since the onset of the crisis, from around 16% in 2008 to 17% in 2012, during the same period the rate went down for those over 65, from 17.8% in 2008 to 13.8% in 2012 – a development that has benefited both men and women and older as well as younger retirees.

Across Member States pension outcomes are marked by persistent gender differences, with women being more exposed to poverty and having lower pensions than men, due to lower salaries and shorter working lives linked to caring duties. On average, women also live longer than men, an as a consequence are more likely to become widowed and end up in more precarious single person households. On average in the EU, women's pensions are 40% lower than men's. Gender gaps in pensions can be reduced, but often it will require long-term policy efforts that combine equal opportunity policies across several fields before people reach the pensionable age with changes in the pension system.

According to the report, in the future, it will be increasingly important to complete a full working career with 40 to 45 years of pension contributions in order to receive a decent pension. In some Member States, future income maintenance after retirement will increasingly depend on private provision through occupational or personal pension schemes. Close cooperation among Member States is necessary on supplementary pensions, including on issues related to their availability, take up and coverage. Depending on national practices, social partners can have an important role in this respect.

Recent pension reforms have postponed retirement and restricted early exits from the labour market. The success of such reforms will depend to a great extent on the ability of older workers to stay in employment as pension ages go up. In 2012 only about half of retirements from the labour market occurred because people had reached the pensionable age. Many people retired earlier for reasons such as health, unemployment, and caring duties. It will therefore be crucial to provide people with the necessary skills, as well as health and social support to maintain their employability as they age.

The report analyses also the economic well-being of older people and the way it is determined. According to the report, while the majority of older people rely on pensions as a main source for income during retirement, their living standards are also determined by income from work after the pensionable age, from income from assets such as housing or financial assets, and from their access to any publicly provided or subsidised services. Housing in particular is an important component of both current consumption and private investment. In 2012, over a quarter (27%) of the total EU-28 population lived in an owner-occupied home for which there was an outstanding loan or mortgage, while more than two fifths (45.1%) of the population lived in an owner-occupied home without a loan or mortgage. As for the financial wealth of older people, the report states that unfortunately the amount of data on financial wealth and its contribution to the adequacy of old age incomes, is generally limited.

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