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Investing retirement money in shares is a dangerous game, says Lincoln

More than 1.8 million over-55s consider shares as an alternative to pensions, according to research by Lincoln Financial Group.

The group says consumers who put money directly into shares and unit trusts, or invest via ISAs and PEPs instead of saving into a recognised pension scheme are risking their retirement income.

Lincoln’s research shows 26 per cent of those aged-55 plus who invest in shares regard their investments as an alternative to their pension and 21 per cent of those are considering increasing the money they have invested in the stock market.

Lincoln Financial Group head of product and marketing Simon O’Connor says some people are playing a very dangerous game.

He says: “Stock market volatility this year has been pronounced and the recent past has seen four years in which the FTSE-100 has ended the year down. In fact the FTSE has still not returned to its high at the end of 1999.

“Long-term investment is the key to successful retirement income planning and pensions are the ideal vehicle to deliver the retirement income aspirations of savers. The tax advantages alone make pension saving demonstrably superior to direct stock market investment.”

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England vs Australia: pensions

Well, the cricket season is here, and England and Australia are stepping up to the wicket. Although we compete with each other in the sporting world, when it comes to pensions, Australia’s pension programme is held up as a model for our auto-enrolment initiative. Auto-enrolment was introduced because people weren’t saving enough into their pensions, and it is still early days but signs are positive. However, in Australia, saving into a pension is compulsory, and in fact employers are the ones who have to pay in. Employees in Australia can make additional contributions into their pensions, but they don’t have to. Should the onus be on the employer or employee to save? Well in the UK we think it’s both, but to get ‘adequate’ savings for retirement it’s the employee who has to pay more in.

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