Pensions or Property?

Abstract

Saving for retirement is fraught with risk and uncertainty. For those not privileged by participation in a defined benefit pension plan, the issue is made complex by problematic decision rules: the options available are variable in terms of their costs and possible consequences, there is considerable uncertainty surrounding the anticipated outcomes of different options, and it is quite unclear whether conventional savings instruments are better or worse than simply relying upon housing and property. In this paper the problem of saving for the future is conceptualised and interrogated against respondents' views and opinions as reported in the Money section of The Sunday Times. Those interviewed are representative of a distinctive segment of the UK working population and face, more than most, the prospect of being largely responsible for their retirement income. Due regard is paid to the age and reported incomes of respondents in relation to their professed intentions just as consideration is given to their apparent risk predispositions. It is noted that many respondents preferred property over pensions across the four years considered—from the peak of the bubble through to the onset of the age of austerity. An interpretation of this preference is offered, emphasising the control of risk apparent in many people's perceptions of the value of property.