Pensions vs property

Posted by Olderiswiser Editorial

The great financial planning debate – Pensions vs Property. Is it best to stick to one, the other ... or both?

property or pensionNobody wastes too much time making the following choices - Eastenders or Coronation Street? Lennon or McCartney? Ovett or Coe? Blair or Brown? The Sun or The Daily Mirror? Facebook or Twitter? Beckham or Ronaldo?

Nearly everyone has a preference and a favourite. Responses usually come back in an instant; and definitively - except perhaps in the case of Tony Blair or Gordon Brown.

Actually, your choices tend to reveal more about you, your character and your mindset.

The great financial planning debate – PENSIONS v PROPERTY – tends to bring a similarly quick response. You choose one side or the other, as though it’s a boxing match, with a winner… and a loser!

Actually, you can back both, as your financial adviser will show and suggest. It would take a brave (foolish) man/woman to put all their eggs in one financial basket, to the total exclusion of the other. There are times to focus on property – and occasions where your pension pot should be your priority.

That’s the balancing act for the financial adviser, who will also take account of your preferences, what you are comfortable with and the sort of investments that allow you to sleep at night. It’s something of a ‘psychiatrist’s chair’ moment – yet most people seem to think they know the answer

“Property or Pension” is a favourite question in the Fame & Fortune interview on the back of the Sunday Times Money Section.

A recent subject was top divorce lawyer Ayesha Vardag (aged 45), who was in no doubt, provoking the headline: I settle for houses over pensions after answering the question: “Property. I only trust property and my own businesses. With property, you can let it, sell it, or live in it.” (1)

Not everyone is that certain. In recent months, the following famous personalities have answered that question as follows.

Economist John Kay (65): “Diversification means having both.” (2)

Double yachting Olympic gold-medal winner Shirley Robertson (45): “I think both. I only have one property, but have started paying into a pension. In the past, all my spare cash has gone into sailing and our house.” (3)

Publisher and poet Felix Dennis (66): “The gold and land are my main security, though I have filled up my pension.” (4)

British Lions rugby star Jamie Roberts (26): “The tax breaks make pensions worth having. I know I have a long time until I access the money, but it’s important to save for the future.” (5)

Business strategist Edward de Bono (80), the inventor of the ‘lateral thinking’ concept: “Property without a doubt”. (6)

BSkyB’s racing commentator and former FI driver Johnny Herbert (49): “Probably bricks and mortar. If I could, I would be interested in classic cars.” (7)

Asset manager Nicola Horlick (52), the City high flyer, once dubbed ‘superwoman’: “I prefer property. I do have a self-invested pension, but it’s a small part of my overall investment portfolio.” (8)

Everyone’s different – and everyone circumstances are different. We all want different things at different stages of our lives. It’s not so much for the financial adviser to tell us where to go, more for them to make sure that, whatever the journey, we are as prepared and as secure as we can be.

November was an interesting month for peering into the property crystal ball. One national newspaper’s front page blasted: HOUSE PRICES SOAR BY £13,000 (9) – while another’s declared: POPULATION OF BRITAIN TO SOAR BY 10M IN JUST 25 YEARS. (10)

Any joy in counting your blessings for already being a home owner were immediately dampened the same day by a report from the Policy Exchange which stated that Britons pay the highest property taxes in the developed world and more than twice the average for the 34 rich countries in the OECD. (11)

As well as finding the deposit, repaying the loan (plus interest), property buyers have stamp duty, Council Tax and, potentially, Capital Gains Tax to think about.

Property lovers pay up front for their desire to have an asset they can see, touch and, again potentially, pass on.

Those with pensions funds get the tax breaks on the way in; and you don’t need anything like a house deposit to start your pension saving. There’s not a lot else for you to do, other than keep an eye on the fund and hope there’s enough to provide for you in your long awaited retirement.

That’s when the property lovers really poke fun at pensions; the changing regulations and limits to your savings and the generally accepted poor financial deal when it comes to buying an annuity.

For many the deciding factor in this argument comes when the Grim Reaper makes his call. In most cases, your pension dies with you – the house remains standing and it (or cash from its sale) may find its way to your heirs.

Property is also about involvement. You choose the house, maybe in an up-and-coming area; you spend time and work on it, all the time increasing its value. With the pension, you put your trust – and your future – in someone else’s hands and take a back seat.

Even financial advisers have a favourite in the property v pension argument, because of their own experiences and knowledge of what might be coming round the corner. Yet, they appreciate that clients are all different and the skill is in recommending a plan that satisfies their needs as well as their wants.

For a free, no obligation initial chat about your individual finances, call us on 0800 0112825, e-mail or take a look at our website


  1. Sunday Times Money – 11th November 2013

  2. Sunday Times Money – 15th September 2013

  3. Sunday Times Money – 11th August 2013

  4. Sunday Times Money – 16th June 2013

  5. Sunday Times Money – 18th August 2013

  6. Sunday Times Money – 1st September 2013

  7. Sunday Times Money – 6th October 2013

  8. Sunday Times Money – 21st July 2013

  9. Daily Express Front Page – 7th November 2013

  10. The Daily Mail Front Page – 7th November 2013

  11. The Times – 7th November 2013

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