The pensions industry has been highly critical about plans floated by the government to allow first-time buyers to use pension savings for a house deposit.
This suggestion was made by the pension minister Guy Opperman MP yesterday. He pointed out that thanks to AE many people will soon have pension savings in excess of £10,000 but be unable to get on the housing ladder. However he did not detail any specific legislative changes.
The People’s Pension director of policy Phil Brown says: “It’s disappointing to see that the Government has not completely closed the door on a policy which would further inflate the bubble in the housing market, deplete young people’s retirement savings and transfer that money to older people selling property.
“Pensions are about providing much-needed retirement income for workers, with international evidence suggesting that pension pots are never adequately replenished once they have been accessed early.
“In America, roughly 1.5 per cent of assets are cashed out from US pension pots annually, reducing savings on retirement by a quarter.
The only answer to getting more people onto the property ladder is to provide much more affordable housing.”
Isio partner Mike Smedley adds: “Robbing Peter to pay Paul might be a tempting vote winner as young people struggle to get on to the property ladder but we would caution against the instant gratification of dipping into pension pots.
“Pension saving is nowhere near where it needs to be; this kind of ‘it’s ok to dip into the piggy bank’ message risks undermining pension policy and the great success of auto-enrolment in increasing savings and the number of people saving.
“Moreover, do we really need another incentive for young people to increase their debts and add more fuel to the fire of high property prices? Step away from the pension pot!”