The over 50s believe that pensions are the best way to save for a comfortable income in retirement, and have more confidence in pensions to provide security and good returns over other products, according to research from Retirement Advantage and YouGov1.
Well over half (61%) of over 50s surveyed (who have a pension) say they would recommend pensions as the best way to save for retirement to someone entering the workforce today. 30% of respondents would neither recommend or were against pensions, while 9% said they would not recommend a pension as the best way to save for a comfortable retirement.
Pensions also featured at the top of the list of types of financial products that over 50s have confidence in to keep their money safe and deliver good returns, with net confidence at 40%. Pensions rightly sit at the top of the preferred way to save for retirement. With tax advantages, employer contributions and the additional flexibility from pension freedoms, there really is no better way to save for the long-term. Unfortunately pensions continue to be a political football with moving goal posts, while the launch of the Lifetime ISA means many people may miss out on a hugely valuable employer pension contribution.
Hopefully the future generations of savers created from auto-enrolment will continue to see the benefits of pensions as the most effective way to save. Those surveyed also stated that they have high confidence in other traditional savings vehicles, including buy-to-let properties (40%) and cash ISAs (38%). Although interestingly confidence in stocks and shares ISAs was significantly lower at 25%.
Recent developments like peer-to-peer lending have the lowest levels of confidence (10%). When it comes to managing their own money, people show the most confidence in pensions as the way to save, over and above ISAs and direct investments.
Buy-to-let features strongly, which is no doubt driven by the British affinity to property, but newer ideas like peer-to-peer lending have yet to gain the confidence of savers.