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People value property over pensions, but fail to recognise retirement income potential

New research from Canada Life has revealed that more than half of UK homeowners believe their pension pot is worth a lot less than their house or property, amid a new quarterly house price high of £216,805.


Overall, two thirds of people think their pensions are worth less than their property, with 52% saying it is worth a lot less - an 11pp rise from 2016. The perception reflects the fact that the wealth of the average person is £86,000, of which 19% is pension wealth and 79% is property wealth.


However, despite this perception, 52% of people still say they will rely on their pension rather than their home or property to fund their retirement. 28% say they will rely on both their property and their pension.


Alice Watson, Head of Marketing and Communications at Canada Life Home Finance, said:


“We are living in an aging society, where the number of years people spend in retirement is on the rise. It’s now more important than ever for people to be aware of all the options available to them to help fund their retirement. Traditionally, people have relied heavily on their private pension wealth, alongside their state pension, to be their main source of income in retirement.


“But the amounts that people have in their pension pots are unlikely to provide the style of retirement people want, and although people recognise that there’s more wealth to be found in their homes and properties, they’re not grasping that opportunity. People need to work closely with advisers to understand the advantages using their properties to fund their retirement can bring, not just in terms of monetary benefits but also for inheritance planning."


So far in 2019, over £2.8 billion has been released from houses or properties using equity release. The most popular reasons for doing so this year have been clear an existing mortgage (46%), home improvements (41%), consolidate unsecured debts (24%), holidays (21%) and for daily living expenses (18%).


Alice Watson adds:


“There are lots of different reasons why people choose to use lifetime mortgages, but the fact that daily living expenses is one of the most popular options shows how much people are beginning to see their property as an extra source of income. They’re not just using it to fund big ticket items like cars or holidays, but for those things which they might have expected their pension to cover.”

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Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Canada Life International Limited and CLI Institutional Limited are Isle of Man registered companies authorised and regulated by the Isle of Man Financial Services Authority.

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Stonehaven UK Limited and MGM Advantage Life Limited, trading as Canada Life, are subsidiaries of The Canada Life Group (U.K.) Limited. Stonehaven UK Ltd is authorised and regulated by the Financial Conduct Authority. MGM Advantage Life Limited is authorised and regulated by the Financial Conduct Authority.