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Equity release average rate reaches six-year high
Rachel Springall

Rachel Springall

Finance Expert & Press Officer
Published: 04/07/2022

Interest rates are rising within the equity release market. The average lifetime mortgage, otherwise known as an equity release product, now stands at 5.63%, the highest it has been since August 2016.

In fact, the average rate today has now breached 5% for the first time since April 2019.  

Rising in tandem with these rates are the number of people looking to use some form of equity release. Figures from the Equity Release Council for this year’s first quarter saw customers unlock £1.53 billion of property wealth in total. This was up 14% from the fourth quarter of 2021 – previously the busiest quarter on record.

Much of this could be owed to retirement plans hindered by the rising cost of living, forcing some consumers to consider new ways to plug the gap, such as by releasing wealth tied up in their home.

Indeed, further research from the Equity Release Council found that the majority of new customers have chosen drawdown over a lump sum option.

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Best lifetime mortgage equity release rates this month

Last updated: 13th April 2022

The Equity Release Council’s Spring 2022 Report continues to show evidence that lifetime mortgages make a significant yet stable contribution to later life lending. Key points of the report, published earlier in April, confirm that average equity release rates are creeping up, in line with other mortgage lending and the degree of flexibility offered to borrowers through the ability to make either regular interest payments or ad hoc partial repayments is also increasing.

The plans listed below are not endorsed by Moneyfacts.co.uk but have been chosen as they offer competitive rates for the scenario that we have selected. It should be noted that other plans are available that offer similar competitive rates but may offer incentives, such as cashback, that suit the borrower’s need better. Borrowers should speak to an equity release broker who will be able to select the best plans for individual requirements.

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Pensioners hit hardest by inflation and market uncertainty, says interactive investor

Keeping up with the cost of living coupled with market uncertainty has driven investors to withdraw more from their pension pots.

Due to an increased need for cash to cover living costs and market uncertainty, the average value of income withdrawals from pensions increased in January and February this year.

This is according to interactive investor, an online trading platform, which collected this data from its Self Invested Personal Pension (SIPP) product.

“Not only do older people face a disproportionate impact on their living standards because of the greater than average proportion they spend on essentials such as energy and food, they are also more exposed to the slings and arrows of global stock market fortunes,” said Becky O’Connor, Head of Pensions and Savings at interactive investor.

Its research indicated that the average value of withdrawals from a SIPP drawdown in January was 8% higher than the average recorded over the past four years.

January recorded an average withdrawal amount of £1,944, which was up 25% when compared to the average withdrawal amount in the same month across the past four years.

“What we are likely to see over the coming months is retired people paying more attention than ever to that fine balance between withdrawing what they need to cover living costs and keeping enough in the pot to sustain them for their whole retirement,” said O’Connor.

Pension pots are also falling in value. The average value of a SIPP on interactive investor fell by 8.9% between the end of 2021 and the end of February.

Further research from the company determined that if pension withdrawals continue at a monthly average of £1,927, then fall in value by 10% over one year before growing by 3% in the second year, the average pension pot could lose value by the time the investor reached the age of 65.

With these factors taken into consideration, a £300,000 pension at the age of 65 would fall to a value of £270,000 and would run out at around age 73 instead of age 75.   

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End of tax year tips for pension funds

With the end of year tax season approaching on 5 April, what are the key tips for your pension fund?

With under a month to go until the end of the tax year, it is vital to understand how your pension is taxed. Below are five factors you need to consider before the end of the tax year, especially if you are considering withdrawing from your pension.

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Auto-enrolment trigger to remain frozen for 2022-2023

The freeze also includes the qualifying earnings band, with the lower limit remaining at £6,240 and the upper limit at £50,270.

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Recent News

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Equity release market is on the rise

27th January 2022

The equity release market saw a return to growth in 2021. Record amounts of property wealth were accessed by customers, according to industry body the Equity Release Council, which says the market rose by 24.8% last year, to a total of £4.8 billion.

The equity release market saw a return to growth in 2021.

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Good news for retirees as annuity income reverses three-year decline

18th January 2022

Pensioners may be pleased to see average annuity income increased for 2021, marking a reversal after three years of falls.

Pensioners may be pleased to see average annuity income increased for 2021, marking a reversal after three years of falls.

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Increase in older homeowners using property equity to fund home improvements

6th December 2021

The number of homeowners aged over 50 unlocking equity from their property to pay for home renovations almost doubled in the three months leading up to September compared to the previous three months

The number of homeowners aged over 50 unlocking equity from their property to pay for home renovations almost doubled in the three months leading up to September compared to the previous three months

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Retirees face income shortfall risk

29th November 2021

Retirees looking for the security an annuity provides may be facing lower retirement income than expected as the average annuity rate fell by 2.90% between July and September (Q3)

Retirees looking for the security an annuity provides may be facing lower retirement income than expected as the average annuity rate fell by 2.90% between July and September (Q3)

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Most Popular Retirement News

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Best lifetime mortgage equity release rates this month

13th April 2022

Statistics recently released by the Equity Release Council announcing fourth quarter and full year figures highlight the popularity of Equity Release products. During 2021, 76,154 customers took out new plans, made use of existing drawdown reserves or agreed extensions to existing plans.

Statistics recently released by the Equity Release Council announcing fourth quarter and full year figures highlight the popularity of Equity Release products.

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Equity release average rate reaches six-year high

4th July 2022

The average lifetime mortgage, otherwise known as an equity release product, now stands at 5.63%, the highest it has been since August 2016. Rising in tandem with these rates are the number of people looking to use some form of equity release. Figures from the Equity Release Council for this year’s first quarter saw customers unlock £1.53 billion of property wealth in total. This was up 14% from the fourth quarter of 2021 – previously the busiest quarter on record.

The average lifetime mortgage, otherwise known as an equity release product, now stands at 5.63%, the highest it has been since August 2016.

Read More
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Should you increase mortgage repayments or your pension contribution?

16th June 2021

Whether it is getting a pay rise or paying off ,a long-term debt, getting a little bit extra each month can be a great boost to personal finances

Whether it is getting a pay rise or paying off ,a long-term debt, getting a little bit extra each month can be a great boost to personal finances

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Pensioners need a £33,000 a year income to enjoy a comfortable retirement

17th October 2019

In order for workers to enjoy a comfortable retirement that includes holidays abroad, a generous clothing allowance and a car they will need to have saved enough for a £33,000 per year income

In order for workers to enjoy a comfortable retirement they will need to have saved enough for a £33,000 per year income

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