Don't raid your pension savings to buy a property

Should you be able to raid your pension savings to fund the purchase of your first home, as housing minister James Brokenshire (pictured) has suggested?

The short answer is no. While pension savings might be an attractive target for homebuyers needing a deposit, raiding the piggy bank simply means exchanging today's problem of funding a property purchase for the problem tomorrow of funding retirement.

However, if you do want to save simultaneously for a future housing purchase and for retirement, there is already a vehicle for doing so: the Lifetime Isa, aimed at savers between the ages of 18 and 40. Like other forms of the tax-free individual savings account, Lifetime Isas can be used to invest in cash savings, or in stocks and shares. Returns are tax-free and for each £4 you save, the government will add £1. This 25%bonus is payable on all contributions you make until the age of 50, though you'll only get it on savings of up to £4,000 each year.

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Until you reach the age of 60 you are only supposed to take money out of your account if you're using the money to purchase a property for the first time. Otherwise, there are penalties to pay on withdrawals made before your 60th birthday.

The scheme has got off to a slow start over the past couple of years, but for anyone balancing the need to save for a deposit with the need to put money by for retirement, Lifetime Isas can work well.

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.