Retirement savings gap
The ageing population is a wicked problem that may be expressed in various ways, including:
- increasing dependency ratio of retirees to workers
- inter-generational unfairness arising from an increasing tax burden on fewer workers or decreasing wealth transfers to the next generation
- fiscal pressures from rising costs of pensions, welfare, healthcare and aged care
The retirement savings gap is the macro-level indicator used in the World Economic Forum (White Paper 2019).
Whilst solutions are sought through more effective savings initiatives and more aggressively invested pension funds, the World Economic Forum has made a number of recommendations that included:
“Press the financial services industry to improve its retirement products and better understand the demand for more flexible offerings that provide greater asset diversification.”
This is where Futureproof has focused its research & development to identify a solution at both a micro-level for Pre-retirees and Retirees and also at a macro level for governments, by putting home capital to work.
Pre-retirees can now better prepare for future retirement through the funding of superannuation contributions and insurance products (such as deferred annuities and insurance bonds) using their home capital, rather than after-tax cash dollars.
Governments lacking solutions to the retirement funding gap inevitably look to tightening up of pension eligibility and introduction of user-pay models for healthcare, aged care and other services, to protect their fiscal positions. This makes security of income essential to a comfortable retirement.
Retirees can now secure long-term tax-free annuity income in retirement without depletion of home equity.
This leaves their home wealth intact to fund future health services and aged care, if needed, or to leave to the family.
Home capital is the only untapped remaining asset class of sufficient size and depth to make any real difference to the fiscal issues arising from the retirement funding gap.
Home capital, provided it can be responsibly released through a new financial instrument, has the capacity to deliver massive new capital inflows to the capital markets through mortgage lending, asset management and RMBS securitization.
Our breakthrough innovation
Fintech & insurtech disruption
“Too much of current fintech & insurtech is focused on providing better Customer experiences rather than better meeting Customer needs.
For others, the innovation is simply a solution looking for a problem. Does the world really need another payday lending app, insurance comparator site, mobile payment tech or digital platforms selling the same financial products?
We are in a market environment of ageing Customers unable to meet their retirement funding needs, increasing pressure on healthcare and pensions systems with a rapidly increasing dependency ratio of retirees to taxpayers causing inter-generational unfairness.
No amount of slick new apps, mobile UI’s or digital platforms are going to solve this global problem.
At an individual level, not only are we under-funded for our own retirement, we all know someone – family or friends who are asset-rich & cash-poor needing retirement income whilst ageing in the home or to fund accommodation bonds and aged care.
Futureproof focuses on meeting Customer needs.
We have the disruptive innovation the world needs right now, in the form of a new mortgage instrument to unlock home capital to fund responsible financial products delivering long-term annuity income & retirement funding.
Ours not a solution looking for a problem, it’s a solution to a wicked problem!”
James Huey – Chairman, Futureproof
New financial instrument
The Innes Mortgage Instrument™ is the starting point. It is most simply described as a new mortgage-based financial instrument that monetises home capital, without depletion of home equity.
Over $3M has been invested in product development to date.
This financial instrument forms the core of the design of each of Futureproof’s nextgen smart mortgages.
Nextgen smart mortgages
There are 3 new types of smart mortgages using the Innes Mortgage Instrument™:
- Equity Preservation Mortgage™ – an interest-only mortgage
- Equity Growth Mortgage™ – a principal + interest mortgage
- Equity Access Mortgage™ – an interest-free mortgage
Each of these smart mortgages are the funding engine or funding mechanism to specific bespoke financial products designed to meet different financial needs, without depleting home equity.
Equity Preservation Mortgage
The Equity Preservation Mortgage™ is an interest-only variable rate mortgage that underpins 1st Generation Futureproof products to better meet the financial needs of Pre-retirees and Retirees.
What this means to a Borrower is that whatever home equity they have at the commencement of the loan period, is fully guaranteed to be preserved and fully intact at the end of the loan term.
Development of these initial game-changing financial products and the Product Platform to support them is now being undertaken ahead of market launch in United Kingdom & Australia.
Equity Growth Mortgage
The Equity Growth Mortgage™ is a principal + interest mortgage that underpins 2nd Generation Futureproof products to be announced shortly.
Because there is no outstanding loan principal to be repaid at the end of the loan term, all home equity (i.e. both existing equity + future equity created as a result of capital appreciation during the loan term), is guaranteed and preserved.
What this means to a Borrower is that their home capital can be responsibly monetized, whilst still enjoying full growth in their home equity.
Equity Access Mortgage
The Equity Access Mortgage™ is a no-interest mortgage that underpins our 3rd generation Futureproof products to be announced soon.
Because there is no interest charged, this is the only form of mortgage that ought to be used as a reverse mortgage. Without loan interest, there is no compounding cost, no LVR/Age restrictions necessary and no negative equity risk.
What this means to a Borrrower is that all the upsides of a traditional reverse mortgage can be enjoyed, with none of the usual downsides.