Investment News – UK pension changes: Resolve to start now!

Brett Alegre-Wood
December 9, 2015

Forget the past and the broken UK pension system. Focus on what you can do now.

Recent research suggests that just over one-third of over 55s in the UK are contemplating spending their pensions on buying property.

The government worries that everyone who’s eligible will race out and cash in their annuity, buy all sorts of houses and then lose their money. But if we’re realistic, that’s what’s happening now to your pension fund when you put your money into a pension.

A 5% annuity is hardly enough to live on in retirement.

Sad… but these are the eye-opening facts about your pension fund.

Moneyfacts said that the average annual income payable from a standard annuity fell by 5.7% in 2014, but there has been an even more marked decline in annuity rates so far this year. The average annual income on offer from a standard annuity for a 65-year-old with a £10,000 pension pot has plunged by 5.9% since the start of the year. For someone with a £50,000 pension pot, it fell even more sharply, by 6.4%.

Richard Eagling, head of pensions at Moneyfacts, said, ‘In many cases, retirees looking for a secure income now face the unenviable position of annuitising at the lowest point in the product’s history.'

Actually, it’s not the annuity that’s the biggest problem. Once you get to this stage, it’s already too late. The real problem is that during all those years you should have been making great returns, you’re paying commissions for failure. That’s a failure on the part of the pension fund providers, failure on the part of the governments, and (to a lesser extent) failure on the part of our education system due to the way it completely ignores financial education.

There is a solution

Ignore calls for calm from the government and big business, especially after the UK pension changes last year.

Just follow my six simple steps to claiming your freedom and you can join the armies of property investors who benefit from a fully funded retirement. That’s a retirement without the day-to-day hassles fear-mongers might conjure up about investing.

A poll conducted by Ipsos Mori commissioned by the investment firm Hargreaves Lansdown last year revealed that around 16% of over 55s are expected to use some of their savings to fund a buy-to-let property investment.

Property analyst Hometrack said house prices across the country's major cities lifted 4.3% in the three months to July, the highest quarterly growth since 2004. The report added that overall city level house price inflation remains on track for 10% growth this year from its July rate of 8.5%. The Office of National Statistics house price figures for February 2015 showed that prices in the UK have grown 7.2% across the UK and 9.4% in London.

Rents have also risen and Sam Mitchell, Head of Lettings at Rightmove, said, “Rents have grown this quarter in nearly all regions of England and Wales, fuelled by demand outstripping supply in many of the sought after areas, especially in the East of England and the more affordable areas of London.”

LSL Property Services, which owns Your Move and Reeds Rains, reported in May 2015 that rents had risen by 0.6% to an average of £663 per month in April, 2.2% higher than a year ago. Their survey showed that 49% of landlords think now is a good time to invest in property, up from 47% a year ago and only 1% of landlords believe it is now a good time to reduce their portfolios.

Sequence analysed the prices of hundreds of lettings from estate agents including Barnard Marcus and William H Brown. They found the average UK tenant outside London paid £697 a month in rent in July compared with £670 a year ago, while rents in London increased by 6% to £1,515.

Investing in property means you can avoid volatile markets, achieve capital growth, and guarantee yourself a regular income.

A precursory warning…

I’m not saying you should race out and buy the first thing that comes your way. Things aren’t changing so quickly that you need to jump ship now, this moment.

Do your research, get educated, take your time to familiarise yourself with the market, and then make your move. But don’t let procrastination rule.

Live with passion and fun,



UK Pension Changes

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