The majority (51 per cent) of equity release customers finds the UK benefits system so complex that they are not claiming the benefits they are entitled to, according to research on intermediaries carried out by Safe Home Income Plans (SHIP), the trade body for equity release.
This research was carried out by SHIP as part of its campaign to clarify the relationship between equity release and state benefits.
The confusing nature of the system also means that 88 per cent of people do not fully understand how equity release and benefits interact thus are turning to their advisers for definitive guidance.
Indeed, advisers found that clients were overwhelmingly confused about how releasing the equity in their homes might impact upon the state benefits they receive.
Of these, 42 per cent did not realise that they might be affected at all, whilst at the other end of the spectrum 12 per cent thought that they might lose their benefits completely.
While consumers turned to their advisers for guidance, the lack of clear information from the Government made providing accurate advice a challenge.
Many advisers were confused and almost a quarter (23 per cent) chose to refer equity release clients elsewhere for guidance on benefits issues.
The vast majority (91 per cent) of advisers believe that not enough is being done by the Government to clarify the issue.
Such is the confusion that 15 per cent of advisers refer their clients to the Department of Work and Pensions (DWP) for advice on how their state benefits might be affected by releasing the equity in their home.
"These findings highlight the need for clarity and information for those seeking to navigate the benefits system,” said Andrea Rozario, Director General of SHIP.
“If even financial advisers find the system difficult to navigate, then more needs to be done to make information accessible when it is needed.
"Research carried out by the Pensions Policy Institute (PPI) has found that there is approximately £907 billion tied up in housing equity in the UK, showing how large a role a property can play in funding retirement.
“Alongside this sit figures from the Departmengt for Work & Pensions which show that 60 per cent of pensioners source at least half of their income from state benefits - with 20 per cent of pensioners receiving nearly three quarters of their income from state benefits.
"With so many people reliant upon state benefits, it is worrying that a considerable number might be missing out on the wealth from their home, simply through a lack of information.
“At this time, when the government is looking to cut public spending, I would urge them to work towards simplifying the system for the benefit pensioners and their budget."
