Why house deposits and pensions don’t mix

Should first-time buyers be able to access their pension savings in order to get on the property ladder? Pension industry experts say no, despite pensions minister Guy Opperman this month floating the idea of a product allowing savers to use their pensions to help finance a deposit on a first home.

Opperman points to countries such as New Zealand and the US, where retirement savings can be used in this way in certain circumstances. The idea has superficial appeal: young savers are often frustrated that despite having several thousand pounds in their pension funds, they can’t raise the money for a deposit.

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Opperman also appears to be unaware of lifetime individual savings accounts (Lisas), the scheme introduced in April 2017. These enable savers to put money by, with an additional bonus from the government, that has to be used either for a house purchase or as pension savings. Lisas therefore combine saving for a property and for old age – but have so far proved relatively unpopular.

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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.