Retirement savings products should facilitate penalty-free saving for a house deposit as well as pension says the Association of Consulting Actuaries (ACA).
Writing its response to the FCA Discussion paper on Intergenerational Differences (DP19/2), the
The ACA says that under automatic enrolment, the majority of young people save for a pension from an early age and many will devote significant additional resources – above the minimum combined contribution level of 8 per cent of earnings – in order to benefit from matching employer contributions.
When looking to take out a mortgage, young savers’ pension contributions restrict their ability to borrow the amounts needed to get on the property ladder in many parts of the country.
The ACA wants to see a flexible savings product that can combine both pension saving, with ability to benefit from tax relief and employer contributions, with the ability to also save to buy a house without incurring any penalty for withdrawing funds from the pension early.
An ACA spokesperson says: “Given the overall responsibility that this product would place on individuals, we also believe that a robust advice and safeguarding framework would be required. However, this could be developed to be consistent with and proportionate to wider safeguarding frameworks at older ages around freedom and choice.
“Legislation for auto-enrolment favours saving for retirement over other forms of savings. Freedom and choice has provided flexibility for those over age 55 who can divert their retirement savings to other purposes should they wish, and many choose to pay off their mortgage with their pension fund. Those under age 55 have no such flexibility.”