Pensions Beat Property As Retirement Savings

property pensionLandlords and investors have constant arguments about which is the best investment – but thanks to official figures we now know the answer.

Experts at the Office of National Statistics found retirement savers expect to make more from property than those stashing cash into workplace pensions, even though most savers believed their money was safer in a pension.

The research found 41% of employees believe a workplace pension is the safest retirement saving option, compared to 28% who opted for property.

When the question of which investment is likely to make the most money was posed, opinions were reversed.

Only 25% believed a workplace pension would return the most cash, while 44% felt property would generate the most money.

Stocks and shares were considered the most risky investment

50% of workers not saving for retirement

Despite their feelings about saving for retirement, half of the 10,000 people asked confessed they were not saving any money, mainly because they could not afford to do so.

Some good news from the survey was that the ONS found savers were better informed about their finances and better able to make sensible financial decisions.

However pension expert Tom McPhail, of financial platform Hargreaves Lansdown, argued savers were not basing their opinions on fact.

He says over the past decade, stocks and shares have surged in value by 60%, while house prices have increased by an average 25% – but this figure varies widely between London and the rest of the country.

Pensions beat property

“Pensions win because of top-ups on contributions from tax relief and by employers that can grow a fund quickly. They are also diversified, which means they do not suffer so much in bad times,” he said.

“Although property can rise in value quickly, prices can drop just as fast.”

McPhail also argued that although house prices were higher in the capital, research showed pensions generally had a better return across the entire country than property investment.

TUC General Secretary Frances O’Grady also stepped into the debate claiming millions of low paid workers did not have the means to save for a comfortable retirement and would face financial misery after they had given up work.

About John Cassidy

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