Suffolk Life head of marketing, Greg Kingston, scrutinises the latest concepts in pension planning...
The ever-increasing debate around pensions of all kinds provides material and food for thought aplenty.
Throw in political party conference season and there is a fertile breeding ground for exciting new ways to either address retirement shortfalls, to end overcharging or to solve countless other economic and social woes that trouble the country.
The latest idea comes from the Liberal Democrats and is the concept that a pension can be used to support the purchase of a child’s first home. At the time of writing details are very thin, but putting aside possible contradictions with other recent announcements, it is worth evaluating how this idea could work and what the pros and cons might be.
Pension innovation the good, the bad and the ugly
There is a good deal of money within the UK pensions system, although probably not enough. But because of this money pensions are frequently a target for someone or something that requires funding. Gordon Brown’s £5bn a year tax raid is perhaps the best-documented example.
A significant amount of this saving sits in public sector defined benefit schemes, but there is still a good deal in personal defined contribution schemes.
Many have argued that a lot of this languishes in relatively poorly performing, higher charging funds – the idea that this money could instead be put to a more immediate use closer to home will doubtless appeal to some.
School leavers are unlikely to have much in the way of savings and graduates are likely to be saddled with a good deal of debt. Neither group are likely to have the means to quickly build a deposit to buy their first house, and their parents may not like the idea of their children still living at home into their thirties.
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First mentioned in Cridland Report
Second acquisition of 2019
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