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Retirees favour personal pensions and annuities

Retirees favour personal pensions and annuities

Category: Retirement

Updated: 20/06/2013
First Published: 17/04/2013

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

A growing percentage of people entering retirement are choosing to invest in personal pension schemes or annuities, new research has revealed.

According to the Equity Release Council, private pensions and annuity plansaccount for 40% of a retiree's overall income, compared with 37% in 2008 and 32% fifteen years ago. Reliance on the state pension as a regular form of income has also increased, making up 38% of an average retiree's income.

Poor returns from investments are believed to be a fundamental reason for more retirees turning to personal pensions. Additional analysis by the Land Registry and the Office for National Statistics (ONS) found the average house price has risen by 91% since 1997, in comparison to the average retiree's income growing by just 46% over the same period, suggesting that more people consider their homes as their main financial asset.

Nigel Waterson, chairman of the Equity Release Council, said: "What we are seeing is a new reality emerging in terms of retirement income as people increasingly look to pensions and annuities, rather than investments, to finance their later years.

"However, the uncertainty surrounding many funds means that people's property is very often their biggest and most secure financial asset, with a far greater return on their original investment.

"Particularly if they bought their homes some time ago, many will have a large amount of equity tied up in their property that can relieve the pressure on their retirement income and help with additional expenses."

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