The Bank of England chief economist who caused an outcry among advisers for saying they do not understand pensions has argued property is a better bet for retirement saving than a pension pot.
Speaking to The Sunday Times, when asked whether owning a property or a pension was better for retirement, Andy Haldane answered “almost certainly property”.
He says: “It ought to be pension but it’s almost certainly property.
“As long as we continue not to build anything like as many houses in this country as we need to meet demand, we will see what we’ve had for the better part of a generation, which is house prices relentlessly heading north.
“I would quite like the day to come when that wasn’t the case, but we’ve got a lot of catching up to do.”
In May Haldane admitted he could not make “the remotest sense of pensions” and added “conversations with countless experts and IFAs have confirmed for me only one thing – they have no clue either. That is a desperately poor basis for sound financial planning.”
He told the newspaper: “I must admit that when I said that pensions were complicated, I hadn’t expected it to be a statement of great controversy.
“My experience since then has rather reinforced the impression that most other people find them quite complicated too.”
Industry experts have hit back at his comments, with head of pensions at Aegon Kate Smith pointing out that “everyone can have a pension, but not everyone is able to buy a house.”
“Pension savers receive more tax incentives than property, helping people to save and build up pension pots quickly.”
Tom McPhail, head of retirement policy at Hargreaves Lansdown, says pensions are much cheaper to run, typically costing around 0.75 per cent a year compared to the running costs of a property, which can “easily” be as much as 10 per cent of the value.
Pensions also had the benefit of employer contributions, tax relief and the ability to diversify investments, McPhail adds.
“After his previous comments, we wrote to Mr Haldane, offering to explain how pensions work.
“After these latest revelations from him, we suggest his employers make a pension training course compulsory, given he has so much influence over the savings and investments of millions of ordinary savers and home-owners and so little apparent understanding of how they work.”