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Pension Investment

Volume 410: debated on Monday 18 August 2003

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To ask the Secretary of State for Work and Pensions (1) what assessment he has made of the effects of the propensity for those aged 25 to 34 to view property rather than other savings products as a vehicle for pension investments; [131126](2) what assessment he has made of the likely effects of increased use of equity release as a savings vehicle for retirement. [131125]

Individuals of all ages have different preferences and it is right that people are free to choose to save for retirement in a variety of different ways. However, the Government believes that the best way to provide a secure income in retirement—in excess of that provided by the state—is through saving in a private pension during an individual's working life. In general, buying a house and putting money into a pension should not be seen as substitutes for each other. By saving in a pension individuals benefit from risk pooling and diversification, favourable tax treatment and over the longer term can expect strong returns to private pension investment. Furthermore, at the point of retirement, housing wealth is generally much more illiquid than any accrued private pension benefits and the market for equity release products is relatively small and trading down incurs high transaction costs.People will want to take account of the relative risks of investing in different savings vehicles, particularly if these savings are for the long term. Above all, the Government are committed to seeking to provide individuals with information so that they can make informed choices about how and when to save to achieve the level of income in retirement that they expect.