The Pensions Policy Institute says only 46% of Britons are saving enough to be heading for a reasonable standard of living in retirement while Zopa claims this is driving people to seek ways boost their income.
Customer analysis carried out by Zopa has discovered that only “saving for a rainy day” scores higher (37%) than “producing a better retirement income” (32%).
The most enthusiastic fans of ‘Zopa as a pension’ are members lending a lump sum to turn it into an attractive top up to their monthly income in retirement.
Given that 15 year gilt yields on which annuities are based fell recently to just 2.02% and the average amount paid by a deposit account remains around 1%, the average return of 5.5% from lending at Zopa (after charges and actual bad debt over the last 12 months) is proving popular with those reliant on their savings for income.
Many members using Zopa for this purpose said that the better returns, combined with knowing that they can leave their money as an inheritance when they die (not having it disappear as it does with an annuity), makes Zopa lending a “no brainer”.
Giles Andrews, cofounder and CEO of Zopa, said: “As returns from cash deposits and annuities show no signs of doing anything other than staying minuscule, we expect lending at Zopa to boost income in retirement to become even more popular – especially as it enables an inheritance to be left.”
