‘Property a better bet than pensions’, says Bank of England’s chief economist
Andy Haldane, the Chief Economist of the Bank of England, made the comment despite his own gold-plated guaranteed pension which will pay him nearly £84,000 a year when he retires.
Mr Haldane has previously admitted that, despite being one of the country’s leading economists and his career at the Bank of England since leaving university, he cannot “make the remotest sense of pensions” because they are too complicated.
However, Ros Altmann, who was until recently the pensions minister, met these comments with a barrage of criticism. She said it was ‘irresponsible’ to suggest that people should rely on property instead of pensions.
Financial advisers usually recommend that older savers ‘diversify’ their money as much as possible, by holding a range of assets including bonds, property, shares, and cash.
Currently, money paid into pensions attracts tax relief at 20% for basic rate taxpayers, and 40% for higher rate payers, and are normally seen as the best way to save for retirement.
However, the rates available for savers attempting to turn their cash into a lifetime income have drastically fallen recently, and a growing number of pensioners are becoming buy-to-let investors in a bit to use property to turn their savings into a higher income.
In some areas of the UK, landlords can expect to receive about 9% return a year on their investment, whereas annuities for over 55s can see less than a 2.5% return, depending on their age and health.
Mr Haldane said that the best way to save “ought to be pension but it’s almost certainly property. As long as we continue not to build anything like as many houses in this country as we need to … we will see what we’ve had for the better part of a generation, which is house prices relentlessly heading north.”
‘Property a better bet than pensions’, says Bank of England’s chief economist
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