One-Quarter of Pension Savers Think Property Is the Safest Bet

Ian Lewis[1]

Ian Lewis

Money Savings Advice Are Record-Breaking House Prices the Prelude to a Crash?

One-quarter of Brits see property as the safest way to save for their retirement, but workplace pensions still hold the biggest draw overall.

Some 40% of retirement savers told a government survey they felt their money was safest in a workplace pension, but investing in property was thought to be safer than ISAs, stocks and shares or trusting oneself to stash retirement funds in a private pension.

Across all ages and almost all parts of the country, savers agreed that property would offer better returns in the long run- with only people living in the North East and Scotland expecting to earn more from a workplace pension.

The Office of National Statistics findings confirm that many Brits still look to the proverbial Englishman's castle for financial security:

People take comfort from bricks and mortar, and many of us have a long-held obsession with property. This is no surprise after decades of rising house prices, but it could be a risky strategy.

Said Ian Browne, a retirement expert at wealth management business Quilter

The adviser warned of the difficulties of tapping into wealth locked up in property and risks of relying on real estate prices for a pension:

For starters, the property is illiquid by nature, so isn't always suitable as a retirement asset, and increasing house prices shouldn't be treated as a given. A failure to build enough new homes has propped up property values, but it is dangerous to assume this will always be the case as planning law begins to be relaxed

Said Ian Browne

Despite the fact that many view property as a safe, high-returns saving strategy, only 5% of those quizzed by the ONS said their main retirement plan involved selling or renting out a second property.

Many still expect to rely on state pensions – and increasingly, workplace pensions- to fund the bulk of their retirement.

Since workplace pension rules changed to automatically include workers in savings schemes, more people say they expect to use them after retiring.

As automatic opt-in was just being introduced in 2012, only 40% of people had confidence in the retirement living standards that lay ahead for them. After 10 years of auto-enrolment, some 55% of people say they look towards their retirement with confidence about their finances.

Many more report that their main home could be a source of cash in later years, with almost a third planning to downsize or rent out their main property to help top up their retirement income.

This ‘combo’ approach could help to avoid financial hardship by being too dependent on property prices. While property has its place in a retirement planning strategy, care must be taken not to be overly reliant on any one asset as if prices fall then retirement plans can unravel

Pension specialist at Royal London, Helen Morrissey said


Money Savings Advice Author Ian Lewis

Ian Lewis

Ian Lewis is one of our specialist financial writers. Ian has over 15 years of financial writing experience, having worked for some of the largest financial publications in the UK covering topics from mortgages, equity release, loans and financial claims, to name a few.

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