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Property and inheritance: what we're relying on for retirement

Fewer than half of UK adults expect to use a pension to fund their retirement, with most relying on other means.


by Michelle McGagh on Aug 08, 2012 at 12:11

Property and inheritance: what we're relying on for retirement

The amount Britons are saving for old age has fallen, and new research shows 44% of us do not expect to use a pension to fund retirement.

A total of 15.7 million people aged over 18 who are not yet retired are instead relying on alternative means to fund their retirement, according to research by Barings Asset Management.

When asked to select the investments that they will use to fund retirement, just 56% chose a pension, 29% of people are relying on cash to fund their retirement, and the same number are putting their faith in property. One in 10 people polled said their pension was their property and have no other pension provision.

Faith in property

Marino Valensise, chief investment officer at Barings, said: ‘It is astounding that over one in 10 people have focused all their retirement planning on property.

‘This suggests poor planning in terms of asset allocation and a poor understanding of the risks involved by large number of people in the UK.’

Just over a quarter, 26%, said ISA savings would pay for retirement, and 17% are banking on inheritance – although this was more prevalent in the middle and upper classes, where 23% of people said inheritance would make up part of their retirement planning.

Overestimating inheritance windfalls

However, with the average UK inheritance estimated at £45,000 per person, many people may be putting too much faith in the role their inheritance will play in retirement.

More worryingly, 25% of people did not know how they would pay for their retirement. 'It is very surprising to see just how varied retirement funding sources have become for many people in the UK,' Valensise said.

‘While diversification is crucial to best-practice asset management, the suitability of some of these sources can be questioned, such as reliance on inheritance. Overall, the most challenging finding is that nearly half of the adult UK population admit to not having a formal pension at all.’

Figures from the Office for National Statistics show both private and workplace pension saving has fallen. The number of people contributing to a personal pension fell from 6.4 million in 2008/09 to six million in 2009/10.

Fewer than half of full-time workers are now saving into a workplace pension, with 47% of female workers and 48% of male workers contributing to schemes in 2011.

11 comments so far. Why not have your say?

Dislexic Landlord

Aug 08, 2012 at 14:12

The Key here is education and takeing responcibilty for ones own retirment

Im not a clever person far from it I have no qualificatoin from school other that 25 yrds breast stroke

But I have taut myself about makeing money

Ive found a lot of my freinds just dont think ahead its spend today and the reason is the state will look after me or whats the point in saveing because what ever I save will be taken into account such as Council Tax rebates ect

The Benifit System works agains you ifyou do have a pension or saveing

we should inspire folk to save and to learn about the Finacial world around them

Ive learened such a lot in my work life about investments of one kind or anorther

If I can do it being a thick dislexic geordie I thick others can do the same

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Andrew Gilliat

Aug 08, 2012 at 14:39

Its little wonder that private pension plans are attracting so little investment. With charges so high and the ultra conservative investment policies of the managers, one's money goes nowhere near to matching inflation. Whilst there are tax advantages at the time the money goes in, the same money, without front-end tax advantage, might be better in an ISA. The whole pension scene is turning into a national catastrophe.

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Dislexic Landlord

Aug 08, 2012 at 14:50


I agree with you its a Catastrophe

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Lost my marbles

Aug 08, 2012 at 15:00

Annuity rates,poor stockmarket performance and fees.Need one say more.

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Paul Barrett

Aug 09, 2012 at 01:21

Dyslexic mate you might be a Geordie but you are not thick.

Word blindness is a now well recognised issue.

It does not indicate a certain level of intelligence.

There are many well known and clever people who suffer this affliction.

Susan Hampshire, the actress suffers from the same problem.

These people are not thick.

It is a wiring problem in the brain and therefore is congenital.

I think I have the same problem, but with figures.

They scare the living dasylights out of me.

The last dyslexic person I knew was a former work colleague who had a degree in pure maths and had become a London black cab driver.

Now believe me I am not dyslexic in any way and I would struggle severely to achieve what he has done.

However I digress.

You are so correct about the benefit system not making it worthwhile to save for a pension.

With the pension credit system and rent paid etc a pensioner would need a pension pot of about £500000 to receive exactly what the state would pay in benefits.

Nobody in their right mind who could not achieve a pension pot of at least a million will bother with saving for a pension.

It does not work out economically.

The only way the state can save on pensions is to keep increasing the pension age.

The reason it was set at 65 after the First World War was because not many reached that age..

Govt wants this situation to occur again and so will try and increase the pension age.

Mind you I am not sure how many employers would wish to employ a 70 year old?

So you will presumably have people pressured to attend job interviews when it will be clearly known that they will not be offered a job.

All that hassle just to maintain JSA.

It is clearly ridiculous.

Your prmise though is so correct, for the vast majority of the population it is not worth saving for a pension.

Better to put the monies in ISA's.

Then cash them in before retirement age.

Then down the council stating you have no resources and house me and give me loads of pension credit etc.

That is what sensible people will do.

The idiots will have savings and traceable assets which will preclude them from receiving all the state benefits they could achieve.

Have the assets in cash and no one will know.

It is an indictment on society which you have alluded to that the more you do for yourself the less the state will do and yet you will be no better off than someone who spends without a care in the world knowing the state WILL pick up the tab.

What a terrible position we are in, rewarding fecklessness and penalising people who have struggled to do the 'right thing'....oh well!

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Dislexic Landlord

Aug 09, 2012 at 08:50

FAO Paul Barret

You are indeed correct in all you have said

I wish I could have written it so well

I must tell you a story not mine but its good

A man Leaves school with no qulifications he gos for a job as a Loo Atendant

He is interviwed and asked about his writeing and reading skills because he needs to order Toliet Paper Soap ect

He informs the interviewer he cant write and he is turned down for the Job

Later in life the guy starts a Bussiness with a barrow selling vegtables the busiines goes well and the bussines grows and after a time his bussiness grows and grows into a large supermarket chain

One day the man is sitting in his board room talking to his chife accountant

The accoutant says to the man God you have done so well in bussiness and I cant belive you cant read and write

The Bussiness man grins and replys if I could read and write I would be cleaning toilets today

We all have skills which are give and its important to use them to the best of our ability and not dwell on what we cant do but do what we can do

and make the most of it

Thanks for such super reply



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Aug 09, 2012 at 13:55

This article shows, once again, that there is a crying need for rudimentary basic financial education for the population at large. i don't know how this education should best be delivered, but a good starting point would be within the school curriculum.

Once again, the comments following the article have shown Dislexic Landlord (sic) to be one of the most perceptive and astute users and commentators on Citywire. I say that as a tenant myself, having decided a few years ago to take my investment capital out of property, and to invest it in more liquid and dynamic investments such as equities. I still think that this is the right strategy for me, but then what do I know...

However, all the above has persuaded me that we should lobby the Government to make basic financial education a core subject in the National Curriculum. Such a strategy would not work unless suitably educated and experienced teachers could be recruited to teach the subject, and to that end I propose that the Government should also be encouraged to persuade people such as Dislexic Landlord to act as Consultants to the project, should they agree to spare their time.

And in case anyone thinks I'm joking, I'm not.

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Dislexic Landlord

Aug 09, 2012 at 17:56

Wow Market Watcher thank you for such kind comments

I would gladly help if I could



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Aug 09, 2012 at 19:12


No problem. I've read many of your posts and generally found them to be absolute common sense.

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Jayanti Gandhi

Aug 11, 2012 at 11:55

I would use ISA first if company does not contribute to pension. Use pension if company contributes otherwise just do the minimul needed for pension after Isa.

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Sep 01, 2012 at 17:45

Market watcher, you have a point.

Property is not a bad investment and can pay decent returns, provided you have 4-6 properties, at least, to cover periods when one or two are vacant, has a recalcitrant tenant not paying his/her rent, waiting for a new, suitable tenant.

Mind you, if you demand too much they will be empty for longer.

Rents invariably rise, but sometimes remain static and more occasionally drop when there is a glut. As for capital value, that will yo-yo, but invariably, over time, move inexorably upwards, unless located in an area becoming a slum.

Then there are the mountain of regulations to follow and daft LA demands as a difficult tenant totals some part of the premises and demands, via the council, you make good the default.

Then there is theft as they leave, invariably the tenant on the dole rent support and not forgetting the £2000 legal fees required just to get the bugger out. During those 4-6 months there will be no income, and almost invariably a month or two whilst you restore the damage done. Never mind the anxiety and stress that goes with proceedings, which is a very real and time consuming, aggravating stress. It will consume a lot of thinking time and raise your blood pressure, considerably.

If you are versed in court procedure you can do the job yourself, but you will need a lot of experience for that, as well as the attempts of the tenant to delay the hearing date. After that, if you are unlucky to be in a large city, the bailiffs will takes weeks after the date of possession to arrive to evict.

I have known quite a few landlords like Dislexic Landlord, and they did very well, some in purely commercial property and some with a mix, all from humble beginnings and gradually adding to their portfolios.

As for the market, shares, yes, some people cannot get their heads around that so either they are left with the interest rates they can get, which means shopping around and tying up the money for, perhaps years on end.

Annuities are an easy way out, and the low rates now being offered are almost entirely the fault of the govt, they control them, almost exclusively, because they want to sane themselves money on their loans, to hell with any rights of prospective pensioners. MPs are on a sure fire hit, to hell with the 'little' person (the person with smallish savings pots). Those offering annuities are onto a dead cert winner, overall.

Annuity, not for me and I wouldn't recommend. Sure there was a time when they were a good thing, in the long stable times long gone. Now these are offered largely by sharks, in the market for an easy killing.

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