Should people be allowed to dip into their pensions savings to get onto the housing ladder?
Yes – Lauren McEvatt is managing director at Morpeth Consulting.
I’m 32, destined to work until I’m about 70, with £15,000 in a pension. I also have no savings, having used them to start my business, though I’m now at a stage where I can pay into my pension again. I would like to use that £15,000 for a deposit on a home, which I earn enough to service a mortgage on.
There should be a financial product to enable me to either use the pension as a guarantee against the mortgage, or as a loan to myself that is paid back before the bulk of the mortgage amount, similar to the mortgages that allow for a family member to provide the deposit.
Crucially, the pension would need to be repaid, there would need to be an age cap on the product, and this could only work if there are more houses built as well. But a policy like this, recently proposed by housing secretary James Brokenshire, would give me and many others like me the flexibility to plan for our futures in a way that suits us.
The idea of long-term saving is that you put money aside for a rainy day. If you can’t put a roof over your head, I think that constitutes a rainy day.
No – Helen Morrissey is a pension specialist at Royal London.
These proposals will add more complexity to the pensions system and not fix the problem. We already have the Lifetime Isa, which allows young people to save with a government top-up to fund a house purchase or a pension – so why tinker with it?
James Brokenshire’s proposals also risk undermining the very real progress that has been made getting people to save through auto-enrolment. We will see people saving into a pension from the age of 22 only for them to empty their pots 10 years later to buy a house, then have to start saving all over again.
They will face the prospect of having to work longer to fund their retirement or struggle financially – hardly a ringing endorsement for the pension system.
If we are going to help more young people, we must look at the fundamental issue: lack of affordable housing. Without more houses being built, such a scheme risks pushing prices up further, exacerbating the issue.
Brokenshire’s idea will not solve the housing problem, and risks damaging people’s pension planning as well.