EPPARG calls for inclusion of innovative and sustainable financing solutions in EU strategy on ageing

London, 28 April 2021: The European Pensions and Property Asset Release Group (EPPARG) has responded to the European Commission’s Green Paper on ageing, calling for innovative and sustainable financing solutions, including home equity release, at a time when the COVID-19 pandemic is exacerbating budgetary pressures upon EU Member States.

The European Commission launched its Green Paper on Ageing for public consultation in January 2021, which identifies a range of policy challenges when it comes to meeting the needs of an ageing population across EU Member States. The Green Paper reveals that the total cost of age-related public expenditure already exceeds 25% of GDP in the EU27, while the fall-out of fighting COVID-19 and the economic consequences of lockdown measures have posed further challenges.

Steve Kyle, Secretary General of EPPARG, commented:

“The budgetary pressures on EU Member States to provide for elderly populations are being exacerbated by the COVID-19 pandemic on both economic and health grounds. We believe that the current situation calls for urgent innovative and sustainable financing solutions which limit the intergenerational burden”. 

“The growth of home equity release solutions would allow elderly EU homeowners to safely unlock the value of the wealth that they have accumulated in their homes, which represent the largest asset for most people. The EU’s own figures show that more than two-thirds of the EU population own their own homes, while there is a high rate of home ownership among elderly populations in a number of EU countries, which exceeds 80% in Poland, Italy, Spain and Ireland, for example.”

In its response to the European Commission, EPPARG highlights the role of home equity release in reducing the risks of poverty in old age, by providing an additional option for elderly homeowners who are ‘asset rich but cash poor’ for consideration as part of pensions planning.

EPPARG considers that home equity release solutions have a dual role to play in contributing to fiscal and financial sustainability among EU Member States, both in terms of relieving the intergenerational burden on society and supporting intergenerational solidarity within the family.

With regard to pensions adequacy, EPPARG calls on the European Commission to take a more forward-looking approach and to encourage EU Member States to include home equity in the third pillar, which would significantly improve retirement outcomes. It also urges the European Commission to address funding challenges currently faced by market players.

Lennart Grabe, Deputy Secretary General of EPPARG, said:

“We consider that the EU is behind the curve globally when it comes to recognising the potential contribution of home equity release, noting that innovative approaches are being developed globally, with Australia already recognising home equity release as part of the third pillar, for example.”

“One of the main barriers to the expansion of home equity release markets in the EU is the lack of availability of funding. We urge the EU to ensure enabling financial market regulations and sympathetic capital treatment of home equity release solutions so that the EU market can reach its full potential, including facilitating cross-border funding solutions. We also anticipate that funders using returns on property assets over the long term will support the funding of ongoing private pension liabilities.”

EPPARG’s response to the European Commission can be viewed here.