Which? uses cookies to improve our sites and by continuing you agree to our cookies policy

Property investment preferred to pensions

Savers see property as a more profitable option

44% of respondents thought property was their most lucrative savings option 

Property investment is regarded as a better money-maker than workplace pensions among savers, according to a new report. 

In a survey conducted by the Office for National Statistics (ONS), respondents were asked to select the savings option they thought would make the most of their money.  

A total of 44% selected property, against only 25% selecting a workplace pension. 

Find out more: How much will I need to save for retirement? – our guide suggests what you’ll need to live comfortably 

Pensions vs. property investment

The survey’s respondents appreciated the security of a workplace pension, with 41% selecting this as the most secure option, against 28% for property, 11% for a personal pension and 10% choosing an Isa.

Workplace pensions weren’t seen as the most profitable option though, despite the fact they benefit from employer contributions and tax relief.  

Our guide on workplace pensions explores the advantages of joining your company pension and how to spot a good one. 

Property price rises are uncertain

The preference for property investment could be a reflection on the significant rise in house prices over the last few years.  

Nevertheless, a buy-to-let property should always be seen as a long-term investment. Over the long-term, house prices are likely to increase but in the short-term they could fall or stay the same. No-one knows with any certainty what will happen to house prices in the future.

Find out more: Buy-to-let mortgages – a list of things to consider if you’re thinking about investing in property

Pension saving hindered by low income levels

The figures showed that more people are struggling to put money into their pension for financial reasons.  

It was suggested that 50% of people weren’t contributing towards a pension as a result of low income, not working or still being in education in July 2014 to June 2015. This figure stood at just 38% in July 2010 to July 2012. 

Under auto-enrolment rules, workers are automatically included in a company pension scheme, but can opt out if they wish. It appears that many employees don’t feel they can afford to contribute, and are therefore losing out on additional contributions from their employer and tax relief from the government.

Find out more: Pension auto-enrolment – what it is and how it will affect you

People are more confident

More positively, 52% of people were either ‘fairly’ or ‘very’ confident that their retirement income would provide the standard of living they were hoping for. This has increased from 41% in 2010 to 2012.

What’s more, 49% of respondents said they understood enough about pensions to decide what to do with their retirement savings, up from 47% in 2012 to 2014 and 43% in 2010 to 2012.

Find out more: What the pension changes mean for you – our short video explains your new options  

More on this…

Back to top