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Brits turn from pension properties

Monday, 3 November 2008 5:53 PM

The UK's faith in bricks and mortar to fund retirement is waning.

However, 33 per cent of those polled by Alliance Trust said property remained a main source of their retirement income - despite expectations of house values falling by as much as a third. But this compared with 43 per cent a year ago.

The poll of 2,367 people found company pensions returned were the most common source of retirement income.

When asked to name the three sources of retirement income 40 per cent said occupational pensions and 31 per cent said personal pensions.

Some 21 per cent said an inheritance or windfall, 18 per cent pointed to their partner or spouse and nine per cent said stock market investments.

Some seven per cent said a current or future business investment.

Three per cent had their hopes pinned on a future partner or spouse.

Steve Latto, pensions development manager at Alliance Trust, said: "While property prices have been growing rapidly over recent years, the onset of the credit crunch has had noticeable effects on the housing market.

"This no doubt has led to many people re-assessing their pension provisions. It is not surprising that faith in property has fallen already this year and may decline further because of the exceptional financial crisis we are living through and the likelihood that we are heading for recession."

He added the economic changes experienced over the past year highlighted the importance of careful planning for retirement as well as diversification as a way of offsetting the risks inherent in all kinds of investments.

"People often don't appreciate there are many different ways to save for their retirement and they should be prepared to re-assess their investments as circumstances change."

Mr Latto said ISAs can be a good way to start saving for retirement as they can be transferred into a pension fund later in life.

"The most important thing is to investigate the best way to start saving as early as possible and pay attention to your spread of investments so as to help build a pension pot when it comes to retirement age."

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