Till rejects ONS findings on property v pensions

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Till rejects ONS findings on property v pensions

Pensions provide the best returns for saving for retirement, Mark Till has contended – despite ONS figures pointing to property as the favoured method for investment returns.

According to the ONS wealth and assets survey published on 10 November, 44 per cent of those surveyed said property was the most likely method to make the most of their money, while 25 per cent said paying into an employer pension scheme was the most likely.

Mr Till, managing director at Aegon UK, said: “We are a nation obsessed by property prices and as an investment, many people’s homes will have performed well for them over the years.

“However, when you look at the figures, a typical pension fund has returned 2,308 per cent since 1983 while residential property has returned 644 per cent.”

The 20-page ONS publication also revealed that between July 2014 and June 2015, paying into a pension scheme was considered to be the safest way to save for retirement, according to 41 per cent, compared to 28 per cent who considered property as the safest.

Mr Till said: “As with so many things in life, it is better not to put all your eggs in one basket, and property should be seen as just one of the ways in which you build your wealth up to retirement. Buy-to-let can form a part of people’s retirement planning, but is much harder to view your main home in the same way given the emotional attachments people build.”

Stocks, shares, and premium bonds were considered the least safe method of saving for retirement.

According to the survey, the percentage of people very or fairly confident that their income in retirement would provide the standard of living they hoped for increased from 41 per cent in July 2010 to June 2012 to 52 per cent in July 2014 to June 2015.

However, the proportion of people not contributing towards a pension – citing low income, not working or still in education – rose from 38 per cent during July 2010 to July 2012 to 50 per cent in July 2014 to June 2015.

Adviser View

Darren Cooke, financial planner at West Yorkshire-based Red Circle Financial Planning, said: “Ideally, you should have both a pension and property, but if you spin the numbers the property return should have the capital growth figure, which includes rental income on a BTL.

“However, to buy you need to borrow upfront if you do not have a big lump sum, so there will be loan costs. You can start a pension with £50, but at the least you need a 25 per cent deposit for a BTL property, which is £25,000 on a £100,000 property.”