Houses no longer prime retirement asset
Baring Asset Management is advising homeowners relying on property assets to fund their retirement to diversify.
The slowdown in the UK housing market has highlighted the dangers of relying on a specific sector for pension income and research by the investment firm has shown that the number of people who are planning to use property to provide their pension income is falling.
A recent survey revealed a 73% drop in the number of respondents who expect to use property to fund all of their retirement needs.
Some had planned to downsize on retirement or release equity from their property.
Others are buy-to-let investors who have chosen property as a financial solution to retirement, rather than investing in equities, which make up the bulk of pension savings.
According to Baring, in 2007, 3.2 million Britons had their entire pension provision tied up in property but the figure has now fallen to 878,000.
Declining house prices and higher mortgage costs have been forcing people to reassess their positions.
Those who planned to release equity from their homes may now receive less than they expected and buy-to-let investors, some of whom have been reliant on house price growth to make a profit (rather than rental income), are finding it costly to remortgage.
Meanwhile, Baring estimates that 35% of non-retired Britons do not have any form of pension plan.
Twenty-five per cent of 25 to 54 year-olds are not making any provision for their retirement and 22% of over 55-year-olds do not have a pension in place.