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You can find the current article at its original source at http://www.guardian.co.uk/money/2012/sep/24/pensions-experts-sceptical-liberal-democrat-house-deposit-plan
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| Version 3 | Version 4 |
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| Pensions experts sceptical about Liberal Democrat's house deposit plan | Pensions experts sceptical about Liberal Democrat's house deposit plan |
| (6 days later) | |
| Nick Clegg's plan to allow pension savers to use their funds as a house deposit for a younger relative have fallen flat with industry experts. | Nick Clegg's plan to allow pension savers to use their funds as a house deposit for a younger relative have fallen flat with industry experts. |
| The deputy prime minister said the government was looking at ways to allow parents and grandparents to help struggling first-time buyers by using a lump sum from their fund as security for a mortgage. | The deputy prime minister said the government was looking at ways to allow parents and grandparents to help struggling first-time buyers by using a lump sum from their fund as security for a mortgage. |
| This would allow the saver to effectively provide a deposit for the property, with the money only called on if the borrower defaulted on repayments. | This would allow the saver to effectively provide a deposit for the property, with the money only called on if the borrower defaulted on repayments. |
| The plan is designed to help would-be buyers who have been squeezed by rising house prices and stricter criteria introduced by mortgage lenders since the credit crunch. | The plan is designed to help would-be buyers who have been squeezed by rising house prices and stricter criteria introduced by mortgage lenders since the credit crunch. |
| However, the National Association of Pension Funds said the idea made it "slightly uneasy". Its chief executive, Joanne Segars, said: "A pension can only be spent once, and this policy could end up leaving retirees out of pocket. The UK already has a serious problem with people saving too little for their old age." | However, the National Association of Pension Funds said the idea made it "slightly uneasy". Its chief executive, Joanne Segars, said: "A pension can only be spent once, and this policy could end up leaving retirees out of pocket. The UK already has a serious problem with people saving too little for their old age." |
| Segars said the government had already examined and dismissed the idea of letting savers access their pensions early. "People need to keep their pension for their retirement, especially with rising longevity and the costs of long-term care," she said. | Segars said the government had already examined and dismissed the idea of letting savers access their pensions early. "People need to keep their pension for their retirement, especially with rising longevity and the costs of long-term care," she said. |
| The direct general of Saga, Ros Altmann, said it was a "very strange idea" which could mean some savers reach retirement and be unable to take a lump sum because it was tied up as a guarantee. | The direct general of Saga, Ros Altmann, said it was a "very strange idea" which could mean some savers reach retirement and be unable to take a lump sum because it was tied up as a guarantee. |
| Altmann said those most likely to benefit would be from better-off families as higher earners tended to have the best pensions, and there were potential drawbacks to borrowing against the future value of a pension. | Altmann said those most likely to benefit would be from better-off families as higher earners tended to have the best pensions, and there were potential drawbacks to borrowing against the future value of a pension. |
| "Firstly, the value of people's pensions many years' hence is not guaranteed. Most pensions are invested in assets that will rise or fall over time, depending on the markets. Secondly, most people will need their pensions to support them in retirement, or perhaps for later life care needs. | "Firstly, the value of people's pensions many years' hence is not guaranteed. Most pensions are invested in assets that will rise or fall over time, depending on the markets. Secondly, most people will need their pensions to support them in retirement, or perhaps for later life care needs. |
| "Thirdly, borrowing against a future pension lump sum would be more expensive than taking the money out of the pension fund and using it directly." | "Thirdly, borrowing against a future pension lump sum would be more expensive than taking the money out of the pension fund and using it directly." |
| Altmann said better solutions would be the introduction of higher limits on cash Isas to allow young people to save more tax-free, or automatically enrolling people into saving for a property rather than a pension | Altmann said better solutions would be the introduction of higher limits on cash Isas to allow young people to save more tax-free, or automatically enrolling people into saving for a property rather than a pension |
| "If you want to have inter-generational help, then allow grandparents or parents to use some of their housing equity – not their pension – to help younger generations buy a home. That is far less socially dangerous than raiding pensions," she said. | "If you want to have inter-generational help, then allow grandparents or parents to use some of their housing equity – not their pension – to help younger generations buy a home. That is far less socially dangerous than raiding pensions," she said. |
| Mortgage lenders also expressed concern about how the scheme would work. | Mortgage lenders also expressed concern about how the scheme would work. |
| The Building Societies Association said: "New ideas to assist first-time buyers to get on to the housing ladder are welcome. The use of elements of a pension pot as a guarantee, however, raises some particularly meaty questions which need careful consideration." | The Building Societies Association said: "New ideas to assist first-time buyers to get on to the housing ladder are welcome. The use of elements of a pension pot as a guarantee, however, raises some particularly meaty questions which need careful consideration." |
| A spokesman for the Council of Mortgage Lenders said the scheme "was not something we have been actively looking at", and that much more detail was needed before it could take a view on it. | A spokesman for the Council of Mortgage Lenders said the scheme "was not something we have been actively looking at", and that much more detail was needed before it could take a view on it. |
| Liberal Democrats suggest about 250,000 people currently have £40,000 or more in their private pension pots, of which £10,000 could be used for the guarantee. | Liberal Democrats suggest about 250,000 people currently have £40,000 or more in their private pension pots, of which £10,000 could be used for the guarantee. |
| However, the average pension fund in a defined contribution scheme, where the pay out is based on the performance of a fund, not on an individual's salary, is less than £30,000, which would allow only £7,500 to be used to back the deposit. | However, the average pension fund in a defined contribution scheme, where the pay out is based on the performance of a fund, not on an individual's salary, is less than £30,000, which would allow only £7,500 to be used to back the deposit. |
| Also, some savers have money divided between several schemes and it is unclear if they could take all of them into account. | Also, some savers have money divided between several schemes and it is unclear if they could take all of them into account. |
| Top mortgages | Top mortgages |
| Chelsea Building Society | Chelsea Building Society |
| Chelsea Building Society | |
| Yorkshire BS | Yorkshire BS |
| Provided by London & Country for the Guardian | Provided by London & Country for the Guardian |