Housing minister James Brokenshire will today propose allowing early pension access to boost first-time buyers, according to the Daily Telegraph.
You can read the full story here: https://www.telegraph.co.uk/politics/2019/06/02/allow-young-people-dip-pension-pots-fund-first-home-deposit/
Tom Selby, senior analyst at AJ Bell, comments:
“This idea smacks of dangerous political short-termism.
“While the housing market clearly has its problems – particularly for first-time buyers who might struggle to afford the sizeable deposits now demanded by lenders – allowing people to raid their pensions is not a sensible answer.
“Chronic undersaving for later life is one of the biggest challenges facing society today, so a proposal which encourages people to drain their pension pots risks making this problem even worse.
“There is no guarantee that such a proposal would actually help people get on the housing ladder at all. Unless the Government dramatically boosts the supply of homes in the UK then this plan risks stoking house price inflation.
“It’s also not clear why housing should be the only beneficiary of early pensions access. People could legitimately ask why, for example, it shouldn’t be extended to cover debt repayments or to help towards wedding costs.
“The further you go down this rabbit hole the greater the risk you fundamentally undermine the central plinths of the UK’s retirement savings landscape.
“The Lifetime ISA already provides a substantial boost to those saving for a deposit on a first home. Any efforts to boost first-time buyers should focus on improving this product, for example by lowering the 25% exit penalty and extending the age parameters beyond 18-39, rather than ripping up the pensions rules yet again.”
