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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
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.
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.
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