I will start with a post and article from the very good Times stalwart David Byers
In the old days, your suspicion that your future pension wasn’t what it ought to be wasn’t a major worry. The house would help out, plenty of equity – you know!
Well maybe not the equity in your property you thought. The value of your property may actually be less than it was in pounds shillings and pence and it certainly growing in line with inflation. The days when “the annual rise in your equity was greater than your salary” are long gone.
This is the comparison I used to make and I’m sure many other middle-class owners used to do the same. The growth in my pension pot was a nice to have but our property was what gave us security.
We have taken a long time to recognise that property has hit a wall. First it was leasehold and in particular leasehold properties in London and the South East. Now it is anything in London and the south and David Byers article suggests that it is a national problem, only the areas of the north that never got the value of the property boom , are still seeing property prices keeping place with inflation.
David use to work in pensions and now he heads the Times’ property team
He speaks for families that have grown prosperous with property as the fallback and it isn’t any more, well not as we were expecting.
This is not an advertisement for our pensions but I do reckon more about pensions than I did and that’s not just because I’m older (we can all say that), it’s because I’m not sure I have enough coming from private pensions to have the retirement that I expected.
And while the capital security of my flat diminishes, the costs of keeping it up don’t, the cost of the financing doesn’t, the cost of council tax and paying the freeholder and all the other unnecessary payments that can’t be reduced, just don’t fall.
There is so much about paying into pensions that’s to like. There’s the tax-treatment of contributions , there’s the tax free growth of the fund (well almost) and there’s tax free cash and no national insurance to pay on money out.
Just basic things but things that are changing. Pensions are on a long good run , whether they are DC , DB and in its first year CDC. This of course won’t last but we can look back and see a happy picture of long-term returns that can pay us a wage in retirement (when the chance for that comes).
I bet David Byers wishes that he was back reporting on pensions a bit more!