Andy Haldane, the Bank of England’s chief economist, said owning property is better investment for retirement than paying in to a pension.
In an interview with the Sunday Times, Haldane said: “It ought to be pension but it’s almost certainly property,” when answering a question about preparing for retirement.”
“As long as we continue not to build anything like as many houses in this country as we need to … we will see what we’ve had for the better part of a generation, which is house prices relentlessly heading north,” Haldane said.
Pensions are approaching a crisis point after years of low interest rates and low yielding assets. Britain had super-low interest rates since 2009 of 0.5%, until they were cut further to 0.25% this month. Low interest rates makes borrowing and servicing debt cheap but it is a nightmare for savers.
Pension funds’ key asset holdings — government bonds — have negative yields. They are among the largest holders of UK government debt.
Haldane earns a basic salary of £182,000 and is eligible for a pension worth more than £80,000 a year. He told the Sunday Times that he felt comfortable but not wealthy.
“I see myself as not having to worry about money, but plainly not wealthy. I never have [felt wealthy] , and never expect to in this job,” Haldane said.
Ros Altmann, the former pensions minister, said his comments were “irresponsible” according to a report in the Guardian.