Property or pension? Making the right investment for your future

Property or pension? Making the right investment for your future

In September 2016, it was suggested by highly respected and internationally-renowned Chief Economist, Andy Haldane, that investing in property rather than putting money into your pension, was a better plan for your retirement.

The statement was branded irresponsible and heavily criticised by other financial experts. However, it did leave many wondering if there was any truth to these claims, what the benefits of property investment could be, and could these benefits outweigh those provided by pensions.

The following pros and cons for both sides of the argument may help you make the best decision for you. 

Benefits of investing in property

  • House prices have risen significantly over the past 25 years, some areas seeing an increase of over 300%. Demand for property is at an all-time high and this has meant a thriving market.
  • Due to the consistent and rapid increase of UK house prices, investing in property is considered as a relatively safe long-term investment.
  • Though property is an illiquid asset, given time it can be sold and the capital gained from its sale reinvested elsewhere.
  • Property is an asset that you can choose to live in yourself, rent it out, or if you don’t want to let it on the open market, use it as a holiday/second home.

Risks of investing in property

  • Although house prices have increased over recent years, there is always the potential that they will fall and this can leave mortgage holders with negative equity.
  • If you plan to rent out your property, there are some expenses that you wouldn't incur if investing in a pension. For example buy-to-let mortgage repayments, maintenance costs, letting agent’s fees and stamp duty tax.
  • Building a pension takes little to no effort, whereas buying, maintaining, and selling a property takes a lot of time, effort and money.

Benefits of investing your savings in a pension

  • Although still a possibility, it is highly unlikely that you will end up with less than you originally paid into your pension plan.
  • With the majority of pension schemes, your employer will also pay into the plan – essentially you’re earning free money.
  • If you have a company pension, payments will be taken from your salary before any tax is deducted. If it’s a personal pension, although you will be using your net income which you pay tax on, the pension provider will claim that tax back on your behalf.

Cons of investing your savings in a pension

  • You won’t be able to access your pension funds until you’re aged 55, and even then there are many hoops to jump through that can restrict how you can access your pension.  
  • The rules around how you access your pension could be changed by the government at any time.
  • Withdrawing all your savings in one go could mean that you’ll pay a substantial amount in income tax.


Ogilvy and Sneyd provide a bespoke residential property management and lettings service for property investors, buy to let investors and property landlords in Staffordshire and surrounding counties.