The pension forecast is grim – could property be the answer?

A new Government backed scheme is being launched on October 1st, it’s aimed at giving people earning a low wage a workplace pension. According to an article in ‘Your Money’ savers are being warned not to rely on the income, which will amount to as little as £500 per month. This begs the question, with the pension forecast being so grim, could property be the answer?

For the first time, millions of workers will be automatically enrolled in a company pension scheme, whereby the Government tax relief will add 1% to 4% of a workers’ salary, coupled with 3% of the employer’s contribution.

You can understand the steps the Government are taking in introducing Automatic Enrolment into a Company Pension Scheme, as so many individual have just not made any provision for their retirement, believing that retirement is something they can worry about later. So it certainly is a ‘step in the right direction’, but it is certainly not the pension lifeboat that some people think it will be and isn’t helping the overall pension forecast.

With combined contribution levels as low as 8% the pension pay out at retirement could be extremely low.  If people rely 100% on this as their solution, and do not make their own pension provisions as well there will be some very disillusioned and disappointed people facing hardship in the future.

Unfortunately when investing in a pension, unlike property investment, you really do have to start early so you can benefit from the affect of compounding. Even then as Simon Walker from SG Wealth Management comments,’ to get a decent pension at a retirement age of 67 or 68 an individual may need to be putting away 15% of their pay from their mid 20’s’’. For most people at such an early age this is simply unrealistic.

Add to this the risk of low investment returns from the Stock Market itself, and inflation eating into the spending power of their money along with increasingly depressed annuity rates, as wave after wave of Quantitative Easing is applied to prop up the economy and Auto Enrolment is a great start but highly unlikely to provide the living standards that people want and require in retirement. So it really should be viewed simply as a step in the right direction, but individual’s needs to support this step with an action plan for themselves. An action plan which sits outside the Stock Market and spreads their risk.


Gill Alton

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Gill Alton is the founder of Alton Property Partners, which provides a comprehensive and personal Property Portfolio Building Service for investors in the UK.

Alton Property Partners manage the entire investment process, from sourcing property at a discounted value, co-ordinating the Mortgage, arranging the refurbishment, right through to ensuring it is ready for the rental market.

The service is specifically aimed to support those who recognise the value of a UK investment portfolio, but lack the time, or knowledge to be able to invest for themselves because they are full time employees or Business Owners. With full consultation and comprehensive financial analysis, clients can be assured that their portfolio of strong yielding properties will be built to exacting standards and they will be kept up to date every step of the way.

Having been involved in property for 16 years Gill has built a personal portfolio for her family, and in addition to Alton Property Partners, runs a Property Mentoring Business, Venus Property Mentoring which focuses on supporting new investors onto the investing ladder. Having originally left the Corporate world to be a Qualified Mortgage Broker, Gill’s husband now focuses on their family Mortgage Brokerage in Maidenhead – Alton Mortgages.

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  1. The pension forecast is grim – could property be the answer? | Alton Property Partners - October 16, 2012

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