We view with deep misgivings the suggestion by James Brokenshire that first-time buyers be allowed to dip into their pension funds to help them get a deposit on a home (Report, 4 June). There is considerable evidence suggesting that people save too little for their old age. Without an increase in the supply of housing, enabling young people to use their pension fund for house purchases will only result in bidding up house prices, largely benefiting existing homeowners.
The recent policy of auto-enrolment has been a success in increasing the number of people saving for a pension: it followed a long period of consultation and gained cross-party support. In contrast, off-the-cuff suggestions such as Mr Brokenshire’s risk undermining the pension system. We have been here before: George Osborne’s sudden abolition of the compulsory annuity requirement in 2014 has undermined the annuity market without providing any satisfactory replacement. As we predicted, that policy change resulted in some pensioners losing money after being mis-sold unsuitable financial products. Unless we can find ways to insulate the UK pension system from vote-grabbing gimmicks, there is a significant risk that future generations will have inadequate pensions in their old age.
David Blake Professor of finance, Cass Business School
Edmund Cannon Professor of economics, University of Bristol
Ian Tonks Professor of finance, University of Bristol
from Property | The Guardian http://bit.ly/2IvhhNV
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