Pensions? We would rather invest invest in our homes

Property owners are pouring more than twice as much money into their homes each month for improvements and maintenance as they are into their pensions, a survey found.

They hope new kitchens and extensions will boost the value of their home, providing a pot of gold for their old age. Homeowners have been encouraged by a ten-year price boom, which has seen houses more than double in value, turning some into property millionaires.

Huge numbers have rejected the notion of a workplace or private pension after returns on private pensions, which deliver huge management fees to brokers, fell dramatically.

Workers have also become disillusioned with company pensions after many firms axed final-salary schemes which guarantee a decent income in retirement.

Increasingly, workers have chosen to use any spare cash they have to finance huge mortgages to buy or improve the family home.

As a result, the average person has spent around £7,500 on home improvements, such as new kitchens or extensions, to boost the property's value during the past two years - equivalent to £311 a month, the survey found.

This is more than double the £134 they are paying each month into a company pension scheme. Men are making higher contributionsto pensions than women, at an average of £159 a month, compared with women's £102.

Nearly half of homeowners said they considered their property to be part of their retirement savings, an asset to be sold to raise a lump sum when they trade down to a smaller property.

Only 28 per cent said they would not use it to generate a retirement income, according to the survey of more than 2,000 commissioned by Lincoln Retirement Income.

Many have also mortgaged themselves to the hilt against their homes to create mini-empires of buy-to-let properties.

Simon O'Connor, of Lincoln, said: "Consumers have lost a lot of faith in pensions and are looking for alternatives such as property.

"However, relying on your home to keep you when you retire can be risky and the idea that people would like to enhance the value of their property at the expense of contributions to their pension is very worrying indeed."

Lincoln, which sells pensions and investments, has a vested interest in changing spending priorities.

However, many other market analysts expect housing market growth to stall - and even go into reverse.