Page last updated at 10:22 GMT, Tuesday, 1 December 2009

Homes 'used for pension top-ups'

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The wealth held in people's property was hit by the downturn

Many people are still relying on cashing in on the rising value of their property to fund their retirement, according to a survey.

Some 12% of the over-50s have consciously saved less into pension schemes because they expect property values to rise, says insurer LV.

However, they have seen an average of £27,250 wiped off their property values in the past two years.

Those approaching retirement said they had been worst hit, the poll found.

Last resort?

The poll of 4,000 people aged over 50 found that many homeowners thought the situation would improve for them.

About a third believed that house prices would recover to former values in three to five years.

Some 17% said they would add to the value of their homes by carrying out improvements, 21% said they would save more for retirement, and 29% said they would just wait for property prices to recover.

"In a matter of months millions of pre-retirees have seen both their property and pension fund values battered," said Vanessa Owen of LV.

"Despite this, their confidence in the long-term value of bricks and mortar remains."

Last year, consumers' association Which? warned that pensioners should only consider unlocking equity from their home as a last resort.

Equity release schemes could be expensive, inflexible and leave people with little equity, it said. Money released from a property could also affect the level of means-tested benefits which owners were entitled to.



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