Record numbers of people are planning to sell their main home to
fund their retirement, according to research published on Tuesday,
which comes amid claims that pensioners will have to live to 90 to make annuities "good value".
The research, by Baring Asset Management, found that 13% of people (nearly 5 million) say they are planning to rent or sell property to fund their retirement, up from 11% last year.
But there were big regional variations, with people in the south west four times more likely to have property to sell their primary residence in retirement compared to people in Scotland and the West Midlands.
Faith in property as an investment for retirement mirrors the decline in confidence about annuities. An annuity is the annual income that savers buy from their pension pot, but rates have collapsed over the past decade, and moved to new lows as quantitative easing and Funding for Lending has depressed interest rates.
Ros Altmann, a former pensions adviser to Tony Blair, told the Daily Mail that annuities are now "the biggest gamble" of pensioners' lives, and that they will have to live to 82 to get their money back, and 90 before they become "good value".
She said: "Buying an annuity is considered the 'safe' thing to do when reaching retirement. This is misguided. The 'safety' only refers to the fact that the amount of income will be set for the rest of your life.
"But the capital itself is at risk. Most people will receive a very poor return on their money – and many will not get their money returned to them at all."
Many people have turned to buy-to-let as an alternative to traditional pension plans, as the investment does not have to be turned into an annuity – and have enjoyed much better returns than equities or bonds.
The Office for National Statistics reported on Tuesday that house prices rose 0.4% month-on-month in June, as they had done in May, which pushed the annual rate of increase up to 3.1% from 2.9%. This is being inflated by strong price rises in London (up 8.1% year-on-year in June).
The figures come hard on the heels of a report from the Royal Institution of Chartered Surveyors, which indicated that Help to Buy and other schemes are fuelling a rapid recovery in prices.
Economist Howard Archer of IHS Global Insight said: "It is looking ever more likely that house prices will see marked increases over the rest of 2013 and during 2014, with the result that we have raised our house price forecasts. We now expect house prices to rise by at least 3% over the rest of 2013 and to then increase by 7% in 2014."
Article Source: http://www.theguardian.com/money/2013/aug/13/record-numbers-retirement-selling-property
The research, by Baring Asset Management, found that 13% of people (nearly 5 million) say they are planning to rent or sell property to fund their retirement, up from 11% last year.
But there were big regional variations, with people in the south west four times more likely to have property to sell their primary residence in retirement compared to people in Scotland and the West Midlands.
Faith in property as an investment for retirement mirrors the decline in confidence about annuities. An annuity is the annual income that savers buy from their pension pot, but rates have collapsed over the past decade, and moved to new lows as quantitative easing and Funding for Lending has depressed interest rates.
Ros Altmann, a former pensions adviser to Tony Blair, told the Daily Mail that annuities are now "the biggest gamble" of pensioners' lives, and that they will have to live to 82 to get their money back, and 90 before they become "good value".
She said: "Buying an annuity is considered the 'safe' thing to do when reaching retirement. This is misguided. The 'safety' only refers to the fact that the amount of income will be set for the rest of your life.
"But the capital itself is at risk. Most people will receive a very poor return on their money – and many will not get their money returned to them at all."
Many people have turned to buy-to-let as an alternative to traditional pension plans, as the investment does not have to be turned into an annuity – and have enjoyed much better returns than equities or bonds.
The Office for National Statistics reported on Tuesday that house prices rose 0.4% month-on-month in June, as they had done in May, which pushed the annual rate of increase up to 3.1% from 2.9%. This is being inflated by strong price rises in London (up 8.1% year-on-year in June).
The figures come hard on the heels of a report from the Royal Institution of Chartered Surveyors, which indicated that Help to Buy and other schemes are fuelling a rapid recovery in prices.
Economist Howard Archer of IHS Global Insight said: "It is looking ever more likely that house prices will see marked increases over the rest of 2013 and during 2014, with the result that we have raised our house price forecasts. We now expect house prices to rise by at least 3% over the rest of 2013 and to then increase by 7% in 2014."
Article Source: http://www.theguardian.com/money/2013/aug/13/record-numbers-retirement-selling-property
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