Call To Boost Property Pensions In Budget 2014

A campaign to persuade Chancellor George Osborne to allow property investors to include buy to let homes in their retirement funds is gathering steam.

Leading QROPS provider London & Colonial has already urged Osborne to make the rules about which property can be held the offshore pension clearer.

Onshore SiPP providers and property investors are also calling for more clarity.

They want HM Revenue & Customs (HMRC) to give a list of allowed pension investments, rather than a list of disallowed pension investments, to help investment managers and customers make better financial decisions.

Of the group clamouring for change is Property Investors Network, which has issued research showing 42% of members are relying on rents and capital appreciation in property investments to fund their retirement.

Control over pension cash

Meanwhile, another 49% are planning on property income to bolster their other pension arrangements.

The network claims investors have lost faith in pensions and annuities, especially after the recent Financial Conduct Authority report that found investors were losing income because the annuity process could reward providers for failing to point out better products offered by rivals.

“Many ordinary savers are relying on bricks and mortar to fund their pensions,” said Simon Zutshi, founder of the network.

“They believe they should have access to better tax benefits along the lines of pension contribution relief on commercial property in a SiPP.”

Zutshi also claims property investors want more control over their cash.

Reckless bankers

“Highly paid bankers have been reckless with other people’s money and just don’t trust them any longer,” he said. “We believe SiPP rules should be changed to include residential investment property.”

Zutshi also argues that many workplace pensions are underprovided, but residential property has historically provided good returns that supports including the asset as part of a portfolio for a pension.

“Our hope is these findings will add to the debate, especially in the run up to Budget 2014,” he said.

Meanwhile, equity release firm Key Retirement Solutions has revealed an average retired homeowner has seen their wealth from property increase by more than £7,100 during the past 12 months as house values have gone up.

“So much untapped property wealth is bringing equity release back into favour,” said a spokesman. “The average customer can unlock capital in their home to add up to £600 a month to their retirement income.”

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