Using the owner occupied home as a pension: attitudes towards housing equity release in 6 European countries

Abstract

The ageing of European societies and increasing pressure on collective pension arrangements has sparked interest in alternative, more individualised forms of pension provision. Home ownership is regarded as one of these alternatives. Home owners can release housing equity by moving to a smaller owner occupied dwelling or a rental dwelling. Moreover, in some countries, where the pension system is already more individualised, the financial industry has been pioneering so called equity release products, which allow pensioners to supplement their income, while staying in their home. There has been much debate on the desirability of such a way of pension provision, the actual form it should take and the risks involved. However, there is still little (comparative) insight into the perceptions of older citizens on this matter. This paper aims to fill this gap. It presents empirical findings, based on focus group research, on the attitudes towards home ownership, pensions and equity release schemes in six EU countries (Germany, UK, Ireland, Hungary, Italy and the Netherlands). It shows variations in attitudes per country, but also a common awareness that pension systems are under pressure and that there may be a need to tap into the dwelling in order to meet financial needs in old age. At the same time, there is still much suspicion against complex financial products such as equity release schemes. Consequently, there is a need for independent platforms that endorse products through, for instance, a quality label.