A future income assessment now only needs to be undertaken when the term of the mortgage extends beyond the date of which the customer expects to retire however the lender will be expected to take a common sense view of this expectation.
If the expected actual age of retirement is not known then the state pension age must be used as a default.
During the consultation of the final draft some lenders requested guidance about when a higher level of scrutiny of income into retirement was needed if the term did extend beyond retirement age.
The FSA has responded by offering two examples.
Where retirement is many years in the future, it may be sufficient merely to confirm the existence of some pension provision for the customer by requesting a pension statement.
If the customer is close to retirement, the more robust steps may involve considering expected pension income from a pension statement.
However, when asked to quantify “close to retirement” the FSA said: “We do not believe it would be appropriate to provide explicit guidance about when a lender should start applying more scrutiny of income in retirement, as this may vary according to the circumstances of the customer.”