One of the most dangerous things pensioners could do with their retirement pots is to invest in property, according to Scottish Friendly. The savings and ISA provider is concerned that after the pension changes in April there would be many people who would want to cash in on their retirement pots. Warnings to consumers are insufficient, […]
One of the most dangerous things pensioners could do with their retirement pots is to invest in property, according to Scottish Friendly.
The savings and ISA provider is concerned that after the pension changes in April there would be many people who would want to cash in on their retirement pots.
Warnings to consumers are insufficient, Scottish Friendly says, and urges that customers who want to withdraw all or part of the money in their pots receive further “think again” warnings.
“Like many in the industry, we have concerns that people will make investment decisions that could fall flat and ultimately leave pensioners without any source of income. Those retirees planning to invest into property are of particular concern as the volatile nature of the market could leave thousands of people penniless if the housing bubble was to burst.
“The prospect of considerable numbers of people using their pension to buy property for buy-to-let purposes is a very real and present danger to them and the wider long term economy. The industry needs to be doing a lot more to alert people to the risks they could be taking before they take the decision to withdraw all their money to fund this type of investment.
“For those with modest pensions, putting all their money into property represents a real risk compared to those with larger pots who could use property as part of a diversified portfolio. Putting all their money into property means they would in effect be running a business, they’d have no access to their capital and there is no certainty that their property will generate the income they originally envisaged. Unlike regulated investments where customers are protected by Treating Customers Fairly rules, investing in buy-to-let property moves outside this protection, ” Neil Lovatt, director, Scottish Friendly, said.
