15.7 million Brits do not intend to use a pension to fund their retirement with many relying on ISAs, inheritances and property instead and a quarter with no retirement plans at all, according to a new study.
The research conducted by Baring Asset Management (Barings) showed that 44% of people do not intend to use a pension as a retirement funding source. Nearly 30 percent plan to rely on property while 26% look to their ISA savings and 25% have made no plans.
A reliance on inheritance wealth was also highlighted. 6 million people (17%) said that they plan to use inheritance to help pay for their retirement and 23% plan to include inherited assets to in their retirement funding plans. This was less prominent in the upper and middle classes.
Marino Valensise, Chief Investment Officer at Barings said:
“It is very surprising to see just how varied retirement funding sources have become for many people in the UK. While diversification is crucial to best-practice asset management, the suitability of some of these sources can be questioned, such as a reliance on inheritance.”
“Overall, the most challenging finding is that nearly half of the adult UK population admit to not having a formal pension at all.”
4.1 million people claimed that ‘property is their pension’ and they have no other provisions in place for their retirement funding. Valensise said:
“It is astounding that over one in ten people have focused all of their retirement planning on property. This suggests poor planning in terms of asset allocation, and a poor understanding of the risks involved, by large numbers of people in the UK.”
“Assets such as cash and property, and instruments such as ISAs and investment trusts, can play an active role in retirement planning if managed correctly. For those people that have put aside assets for retirement, it is critical to make sure that these are allocated effectively and efficiently, properly adjusted for risk and with a clear understanding of the timescale involved.”