Joshua Funder

Key points:

•  It is critical to change the narrative on the role of the home in retirement.
• The Actuaries Institute believes unlocking 20 percent of the $1.3 trillion in
  housing wealth would deliver retirees an extra $260 billion to help fund another
  25 or 30 retirement years. The means to unlock this wealth is now available,
  comes with strong, well-validated consumer protections and can help Australia’s
  retirees live well at home.
• Household Capital urgently calls for improved national awareness of responsible
  long term access to home equity wealth for all homeowners 60+ years old.

Household Capital, a leading Australian provider of home equity retirement funding, has
welcomed the Actuaries Institute report More than Just a Roof: Changing the Narrative on
the Role of the Home.

Dr Josh Funder said, the home provides housing and age-appropriate accommodation,
retirement funding and access to wealth as well as community and connectedness. Further,
it’s the preferred place for ageing in place and in-home care.

“It provides housing and age-appropriate accommodation, retirement funding and access to
wealth as well as community and connectedness. Further, it’s the preferred place for ageing
in place and in-home care.”

Australia has established world leading national infrastructure relating to home equity
access.

• The federal government’s Retirement Income Review (2020) includes home ownership
  with private savings as the third pillar of retirement funding.
• Australia has world leading consumer regulation and protections for reverse mortgages
  enshrined by the National Consumer Credit Protection Act 2012 and validated by the
  2018 ASIC Review of reverse mortgages.
• The federal government’s Home Equity Access Scheme provides limited access to
  home equity for long term retirement funding.

Household Capital urgently calls for improved national awareness of responsible long term
access to home equity wealth for all homeowners 60+ years old.
“Home equity needs to be positioned alongside the government pension and entitlements,
as well as superannuation, to deliver genuine access to wealth and confidence in
retirement”, said Funder.

Firstly, most customers access their home equity to remain in their home an average of eight
years. Discharge is overwhelmingly voluntary, there are no break fees. Secondly, downsizing
is the principal cause of reverse mortgage discharge. In other words, there is no false trade
off between accessing home equity and downsizing. Finally, customers use home equity to
be the bank of mum and dad when it’s most needed; this is available in addition to preserving
a significant bequest in home equity.

“We need broad awareness and market neutrality to scale the $300 billion national
opportunity identified in the Actuaries Institute report,” said Funder.

Household Capital believes there are several key difficulties to be overcome so as to change
the national approach to retirement savings. These are:

• Awareness, not delivery, of home equity products as part of the retirement income
  covenant, financial advice strategies, mortgage broker product options and direct to
  consumer communications.
• All home equity access products to be equally well regulated, to provide transparency
  and consumer protections. This includes the Home Equity Access Scheme to be
  regulated as a credit product and reversion contracts to be separately regulated by
  ASIC.
• The Home Equity Access Scheme to be structured and priced to scale sustainably,
  indexed along the same lines as the HECS-HELP student loans.

The Actuaries Institute believes unlocking 20 percent of the $1.3 trillion in housing wealth
would deliver retirees an extra $260 billion to help fund another 25 or 30 retirement years.
The means to unlock this wealth is now available, comes with strong, well-validated
consumer protections and can help Australia’s retirees live well at home.

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