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Pensioners Turn To Property Investment

A recent survey from the Office of National Statistics has revealed that more and more pensioners are turning to property investment in order to help line their retirement funds.

The figures from the survey show that the number of people over the age of retirement, who are still working, has doubled from the 1993 figures; and one of the most popular job titles registered by over 65s was “property manager”.

The number of pension-aged landlords who rent property out has risen by a whopping 11% in 2012, and the total has risen by 33% since 2009 and the suggestion is that many pensioners are using their pension savings, which have been hit by falling interest rates in recent years, to buy property with, using property as a long-term investment.

This trend may come as a surprise to some, especially during a recession where the housing market has almost completely collapsed, however, renting is still reasonably strong and, according to Jason Stockwood, of Simply Business, renting out property promises “steady returns” for pension-aged landlords.

According to Stockwood, many retirees are therefore deciding to keep hold of property, even if they are downsizing or moving in with relatives, in order to rent the property out for additional retirement funds.

By contrast, the number of landlords between the ages of 18 and 25 has fallen rapidly from the figures associated with the same demographic back in 1993.

The research also shows that, out of the landlords over 65 who have been renting out property, over two-thirds of them have been doing so for more than three years, demonstrating that many pensioners are seeing property investment as a long-term solution, rather than a short-term top up, to their pension investment worries.

40% Fall in pensioners’ income in five years

The income of pensioners who have invested their money in ‘income drawdown’ arrangements has dropped by close to 40% in the space of five years, according to findings from consumer body, ‘Which?’.

Figures show that a worker who retires with a pension of £20,000 in 2012 will receive approximately £7,000 less than they would have done if they were retiring, with their pension savings in a drawdown arrangement, back in 2007.

One reason for the dramatic fall is a recent change in government rules. The maximum drawdown amount you would get if you bought an annuity had previously been set at 120% by the Government Actuary Department. In April 2011, this maximum drawdown figure fell to 100%, bringing with it a fall in pensioner income.

Falling gilt yields, which, because of low interest rates and quantitative easing, have been falling since 1990, have compounded the problem.

Worryingly, if yields continue falling at their current rate, a retiree with a pension of £200,000 in 2017 would receive just £7,000 a year; yet, according to figures from the Office of National Statistics, retirees will, on average, spend £23,000 anually

This shows how important it is for you to compare and choose the right pension.

New Survey Finds That UK Workers Lack Confidence In Pension Investments

A recent survey, conducted by the National Employment Savings Trust, known as Nest, has revealed that many UK workers lack confidence in pension investments and, as a result, are not saving enough money for their retirement.

The study found that over two thirds of the people asked feared making the wrong decision regarding pension investment, while almost half of them admitted they did not feel as though they had enough knowledge of the subject to enable them to make an informed decision.

The survey was carried out at the beginning of a social media campaign, entitled “Tomorrow is Worth Saving For”, which aims to show workers the benefits of saving for retirement at an earlier age. The campaign is focused on using Twitter and Facebook to reach the younger generation.

From October of this year, an automatic enrolment scheme will enrol huge numbers of workers across the country into pension schemes. The enrolment system will apply to millions of UK residents over the age of twenty-two and will be automatic, unless a worker is already involved in a pension scheme or they decide to opt out. The aim of the scheme is to increase the low number of employees who have pension savings, especially amongst private sector workers.

Meanwhile, pension provider Scottish Widows recently conducted a survey, which found that almost a quarter of working-aged people over 30 were not currently saving for retirement at all

Jersey pension about 80% higher than the UK pension

Even though that the pension in Jersey already is high compared to the UK, an increase has been announced for this upcoming Autumn (2011) by about 2.5%. The  increase of 4.48 GBP results in 184.45 GBP per week for single pensioners and to 306.25 GBP per week for married couples pensions.

Jersey pensions are thereby 82.3 GBP higher per week than the UK pension, which is at only 102.15 GBP per week. In a year the difference in pensions between the Jersey pension and the UK pension is close to 4300 GBP.

The  pensioners in Jersey can enjoy a whopping 80% higher pension than the pensioners in the UK. With this said, to all people in the UK: Do not forget to save for your own private pension if you can! You will need the money.

Increase in pension contributions for Police, Teachers, Firefighters, Civil Services, NHS etc in England

The UK government are discussing changes to the public sector’s pension plans. The main change that has been discussed is whether increased contributions should be enforced or not. It now looks like the pension contributions increase will come into effect in April next year. This will be effecting staff in Civil Services, NHS, Teachers, Firefighters and Police men.

People employed in the public section that earn less than 15 000 GBP per year will however not be effected by the possible increase in contributions.

Employees earning between 15,000 GBP and 21,000 GBP will be paying 0.6% higher contributions from April 2012.

Those that earn more than 21,000 GBP will be noticing the highest increase, with an increase of up to 2.4%.

Paying for Pensions

The government is the biggest contributor to our pensions. But thanks to people living longer the proportion of funds available is diminishing. The Pensions Commission suggests the number of people over 65 will rise by 78% between now and the year 2050.

Pension Savings

The government says over 4.5million people are not saving enough for their retirement.

“Unless we act now … we will bequeath a nightmare both for future pensioners, plunged into poverty, and for future taxpayers, grappling with the consequences” Peter Hain

Pension Age Increase

“Over the next 50 years the number of people over pension age will increase by more than a half - meaning there will be only two people working for every one person in retirement, compared with four people working today.”

Peter Hain told MPs during a Pensions Bill Debate, 7 January 2008

New Pension Scheme Limits

Due to be launched in 2012, the governments Personal Accounts pension scheme will place a limit of £3,600 on annual contributions. Within the new system, workers will automatically be enrolled and will contribute 4% of their salary, with an additional 4% matched by employers 3% and tax relief 1% to a personal pension scheme.

Compulsory Pension Contributions

It has been suggested that a way of solving the UK’s pension crisis is to force people to save a proportion of their income for later life. Provided employers contribute as well, people seem to be in favour this option. The less attractive alternative could see the government increase the starting age for the state pension from 65 to 67 or even 70 years of age.