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Lib Dems mortgage scheme ‘half baked’

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24/09/2012
Nick Clegg’s idea that pension savings should be used as a form of guarantee to help young people get on the housing ladder is ‘half baked’, Saga’s Ros Altmann has said.
Lib Dems mortgage scheme ‘half baked’

The Liberal Democrats are to propose a scheme whereby parents could use a portion of their pension savings to help their children get on the property ladder.

Under the plans, which are set to be unveiled this week at the party’s annual conference in Brighton, a future lump sum pension payout would be used to guarantee the mortgage.

The party says the extra security could result in making homes more attainable, as it could mean young people having to save up for a smaller deposit.

Clegg told BBC One’s Andrew Marr Show: “We are going to work out ways in which parents and grandparents who want to help their children and grandchildren buy a property of their own.

“We are going to allow those parents and grandparents to act as a guarantee, if you like, so their youngsters… can take out a deposit and buy a home. It is a pension-from-property scheme.”

But Saga’s Ros Altman said it would be better to introduce incentives for young people to save themselves – such as allowing cash ISAs up to the full annual tax allowance.

She added the Liberal Democrats current plan needed much more detail.

She said: “Most people don’t have enough in their pension fund anyway – and what if they have more than one child? Of course, most people simply don’t have enough money in their pension fund to make this a viable proposition.

“The average defined contribution pension fund is worth around £30,000, which delivers very little pension income in retirement anyway.”

Altmann called for “joined up thinking” on savings from the coalition and argued against mixing housing and pension policy.

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