Millions of people are still not saving into pensions, latest figures show, instead choosing to rely on their property as a source of income in retirement.
It appears the cost of living in Britain is preventing huge numbers of workers from putting money away into pension saving schemes. According to a new report by the Office for National Statistics (ONS), the number of workers not saving for retirement because they feel they can’t afford it has risen sharply over the past five years.
The proportion not currently contributing towards a pension as a result of low income, not working or still being in education rose from 38% in 2010/11 to 50% in 2014/15.
The report suggests that many workers are instead relying on their property as a source of income in retirement. When asked which method of saving for retirement was likely to make the most of their money, 44% considered investing in property to be most profitable, while 25% had more faith in paying into an employer pension scheme.
It seems that rapidly rising house prices has led to many homeowners believing the value in their bricks and mortar is likely to provide the most comfortable retirement in the future. The UK has even been told to expect a wave of cash coming into the property market since sweeping pension reforms came into place back in April*. The changes gave savers much more freedom to spend their pension money, with many predicted to use their cash to make property investments, rather than purchase a traditional annuity for example.
For those already in or approaching retirement who are looking into the option of accessing the equity from their homes there are a number of options available. Homeowners may choose to downsize to a smaller or less expensive property to free up capital, or could remain where they are and unlock a tax-free cash lump sum using an equity release plan.
Anyone looking to release equity from their home should read Bower’s free independent guide to equity release first. Call 0800 411 8668 or by completing this short online request form.
This is a lifetime mortgage or home reversion plan. To understand the features and risks, please ask for a personalised illustration. Bower Limited is Authorised and Regulated by the Financial Conduct Authority. Financial Services Register Number: 451607.
*Financial Times 10/11/15
