The number of people paying in to a pension scheme has fallen, as consumers instead turn to their homes to provide for their retirement, a report showed today.
The level of people contributing to personal pensions has been steadily declining during the ten years to 2005, according to research commissioned by financial services groups
Prudential and Partnership Assurance. The report, which was carried out by think-tank International Longevity Centre, said the proportion of households putting money into a personal pension has fallen or stayed the same across all age groups during the period.
The decline has been steepest among young people, with the proportion of 25-to 34-year-olds saving into a pension halving from 26 per cent in 1995 to just 13 per cent in 2005.
Only pension saving among those aged between 55 and 64 remained steady at 20 per cent, while just two per cent of those aged between 16 and 24 now pay into a personal pension. The report also found that substantial numbers of people who had been contributing to pensions were no longer doing so.
The research, which tracked the same group of people for ten years, found that while just over one in four were paying into a pension when they were aged between 25 and 34, this dropped to 20 per cent as they got older.
By contrast, property came to represent a significantly larger proportion of household assets, particularly among younger age groups.
Strong house price growth during the period meant the rise in property values outweighed the increases in mortgage debt, and helped all age groups increase their net liquid assets.
James Lloyd, senior researcher at the International Longevity Centre, warned younger people were putting money into property at the expense of saving into a pension.
He said: "Despite the property wealth of older households more than doubling in value during the decade after 1995, these rising property assets are not actually resulting in an improved standard of living for older people in retirement.
"Now a new generation are seeing their retirement saving skewed toward property assets, with bigger mortgages and falling contributions to private personal pensions. But the young risk being let down badly if they think that buying a property is the best way to save for retirement.
"Property should be part of an investment portfolio, but not the only part."