UK - Relying on property to fund retirement income is far riskier than putting money into an occupational scheme, Pension Commission chairman Adair Turner warns.
Britons currently have more than £2trn of personal wealth tied up in property compared with £1.5trn in pension funds.
But Turner told PP there were two reasons why it would be a mistake to see property as a solution to pension problems.
“One, is that none of us really knows what the long-term price of houses should be – should that £2trn really be worth that or are house prices over-valued?
He added: “Secondly, the reason why it is not a solution to the pension problem is that people who don’t tend to have good pensions tend to be the people least likely to have expensive houses. It is not a solution to the problem of pension savings.”
Turner admitted the burgeoning residential property market was a potential threat to the pensions industry and said further investment in the sector could worsen the pensions crisis.
“Our overall point of view is that property is clearly an important issue given the sheer scale of it. But it will do nothing to help the pensions problem.”
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