Is home where the pension is?

With recent evidence of falling house prices, Friends Provident is urging people to think beyond property when it comes to their financial futures. According to research it undertook before the credit crunch, a third (33%) of consumers were depending on property or equity release to fund their retirement.

Calculations from Friends Provident show that if house prices fell to the level of the last property slump in 1992, the average homeowner could be left with a negative equity of - £89,850 based on figures from the Council of Mortgage Lenders (CML) showing the current average mortgage is £129,000 at 80% loan-to-value.

With research from the life and pensions firm finding that two thirds (65%) of UK consumers haven't started saving for their retirement, it is warning them to avoid sole reliance on property.

Jeremy Ward, head of pensions marketing at Friends Provident said: "If house prices continue to fall, people could find themselves in serious financial difficulty with negative equity on their property and no personal pension. This is a dangerous situation to be in if people don't have any savings or a pension to purchase an annuity for their ‘winter' years.

"Our research shows a potential crisis for some people in the future. People have depended on the property market in the past to fund their retirement, but with the uncertainty over the past few months and the current credit crisis they should not put all their eggs in one basket."