As soggy, and windy Britain buckles under the weight of yet more storms, the best pensions advice from a minister is to invest in solar panels.
Energy minister Greg Barker claims solar panels give a positively glowing return of between 5% and 8% and are a significant improvement on many other investments.
His tip is for over 50s approaching retirement to consider sinking around £4,500 into installing panels on their roofs – which he says is the average cost of buying panels.
The Energy Department also revealed 500,000 homes are already basking in hot returns from mounting the panels on their homes.
Barker argues that although the initial outlay is expensive, the long-term returns from investing in solar panels far outweigh the cost.
Hot prospects
Two types of panel are available – those that generate electricity and others that heat water.
Panels that generate electricity power the home and heating systems, with any excess electricity sold to the national grid on special tariffs.
Panels that heat water do not power the home and do not generate electricity for sale to the grid.
Barker explained solar panels are a better investment than some pensions and much better than many annuities pensioners buy to guarantee an income in retirement.
Annuities return around £6,000 a year income for every £100,000 of savings. However, average pension pots are between £35,000 and £40,000, which would buy an annuity income of £2,400 if all the cash was invested in a standard contract.
“Solar energy is a hot financial proposition,” said Barker. “Investors get a guaranteed tariff for 20 years and if the panel is well-sited, the yield can return 8% or over. That is more than an annuity, particularly if you are in your 50s or early 60s and looking to buy now when rates are particularly low.”
Sunny disposition
“Those approaching retirement should look at whether solar panels are right for them, because in some circumstances, they will get a higher return than from putting the money into an annuity.”
Solar panels can generate power and hot water even on cold, cloudy days, but the location of a home is important in the investment decision.
Roofs facing certain directions pick up more sunlight than others.
The number of panels also has to be matched to the power requirements of the property – too few panels mean buying in extra power.
