Industry hits back at Haldane’s views on property v pensions

Professional Adviser reports...

Advisers and providers alike have attacked Bank of England chief economist Andy Haldane’s suggestion that property is a better retirement investment than pensions.

Among the experts queueing up to respond to the chief economists’ comments, which appeared yesterday in an interview with The Times, has been Aegon head of pensions Kate Smith, who said “Saving into a pension is the best way to save for retirement.

“Pension savers receive more tax incentives than property, helping people to save and build up pension pots quickly. Automatic enrolment has been a game-changer, and the UK has seen 6.5 million new savers since 2012.”

Smith added “Haldane’s own experience will be very different to the majority -everyone can have access to a pension but not everyone can afford to buy a property.

“He isalso in the public sector and does not have to think about pension contributions, whereas the vast majority do have to think about what goes into their pension. The government needs to promote a responsible saving culture and pensions promote this engagement.”

Tilney Bestinvest managing director Jason Hollands, who described Haldane’s comments as “unfortunate” also picked up on the “gold-plated” nature of Hadane’s pension.

“For most people, their home is somewhere to live rather than an investment,” he added. “So the idea the average person can downsize their property and that alone will see them through retirement is inaccurate.”

With regard to Haldane’s argument that pensions are a more complicated form of investment, Hollands said “They are more complicated for wealthier investors because of the Lifetime Allowance and the tapering regime but, for most people going into a workplace pension, it is quite straightforward.

“The pension offers a long-term savings vehicle that is both diversified and receieves a triple tax relief.”

Also picking up on the tax benefits associated with pensions, Pensionexpert4u adviser Mark Brooke said “On contributions to pensions you enjoy tax relief but, if you look at the buy-to-let stamp duty, that’s the government taking money away.”

He added: “If property is so great how come commercial property funds fell by 20% just a couple of months ago and investors were frozen, as they couldn’t withdraw their money?

“Yet, even if you believed property values were going up forever, you would still have to consider the tax relief involved in pension investment.”