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&#39Pensions will beat the performance of buy to let and Isas&#39

Pensions remain the best retirement savings vehicle and will outperform long-term saving in an Isa or property, Legal & General pensions strategy manager Adrian Boulding argued at last week&#39s Pensions in Crisis conference in London.

Taking a swipe at the buy-to-let market, Boulding told the conference that tax relief on pensions coupled with historic long-term returns on equities make them a better retirement vehicle than property or straightforward Isas.

Scottish Equitable pensions development manager Margaret Craig says Boulding is correct and that the advantage pensions have over Isas will be increased in 2004 when dividend tax credit on Isas is removed.

But mortgage IFAs argue that returns on equities and property over the last 40 years have been broadly similar. They add that people using buy-to-let properties as a means of saving for retirement benefit from gearing through their mortgage.

Boulding told the conference: “While there are good economic grounds to believe that the holders of equities should benefit from real growth through sharing in the increasing prosperity of the nation, the position is less clear for residential property which over the long term is prone to deterioration of condition and loss of value through obsolescence.

“Governments have used tax incentives to encourage savings in a pension vehicle for generations and are likely to continue doing so in the long term.”

Craig says: “Some people say it is a disadvantage to not be able to get hold of your money but being tied in can actually be a useful discipline.”

Charcol senior technical manager Ray Boulger says: “People who invest in buy to let have a mortgage and get the benefit of gearing so they get a better degree of return.”


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Pension freedoms: stop the scams

At the beginning of 2015, we highlighted that the new pension freedoms that come fully online on 6 April also represent a very attractive opportunity for the criminal fraternity to scam savers out of some, or all, of their accumulated retirement savings.


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