Losing faith in your pension?

JPMorgan Asset Management in its latest 'Pensions Map' report into the state of the UK's retirement provision shows that traditional pension schemes are falling out of favour with less than half 48% of people of working age expecting formal pension schemes to be among their main sources of income in retirement. And the reliance on pensions shows a continuing decline. 62% of people aged 55-64 said a pension would be one of their main sources of income in retirement but this falls to only 38% among 25-34 year olds.

Although the research still ranks pensions as the most prevalent means of retirement provision 48%, other investments, like savings accounts, ISAs and shares, are strong contenders, with 41% of people expecting these to provide a significant part of their income in retirement.

Meanwhile, 35% expect their own property to provide a significant part of their retirement income and, perhaps worryingly, almost a third 32% are going to rely on a part time job during retirement.

A large proportion of people are also putting their faith in third parties. Almost a fifth of people 17% hope that inheritance will provide income in old age and 29% are likely to rely on state benefits, while 30% are expecting to rely on a partner or spouse's income.

David Barron, head of investment trusts at JPMorgan Asset Management said: "The balance of retirement funding is shifting and traditional pensions are falling out of favour. However the findings of our research show that people aren't sure where to turn to as an alternative source of retirement income, and which of the alternatives are right for them."

Barron is particularly concerned that people could be overestimating the potential returns from property. With faith in traditional pensions in rapid decline, and people over-estimating the returns from property downsizing, Barron believes now is the time to take a good look at investments like shares, investment trusts and ISAs - already the most popular alternatives to the traditional pension.

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2006-10-24 10:23:38 © Moneyextra.com