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Unconventional pension savings 'could be hit by credit crunch'
13 February 2008
Unconventional pensions savings could be hit by the credit crunch, the Pensions Advisory Service (TPAS) has warned.
The squeeze on credit, which seems to have slowed the economy down, could lead to a drop in house prices and stock values, which could affect people whose savings for retirement were tied up in stocks or were counting on the equity in their home going up.
In 2005 the total income of self-administered pension funds rose to £58.5 billion according to the Office for National Statistics.
Des Hamilton, technical director of TPAS anticipated that people who have not been saving in conventional vehicles, in the way many young people have, could see the impacts of the credit crunch leaving them exposed.
He said: "Where I think you're going to find a problem is that if this credit squeeze leads to, or is partly instrumental in leading to a recession, [which in turn causes] significant reductions in stock market values and property values – those are the factors that will put people off investing.
"A lot of people may have been depending on the equity in their homes in retirement. If house values drop – there are some forecasting up to a 20 per cent drop – then some people could be very badly affected close to their retirement."
