First-time Buyer  

Pension shake up proposals spark debate

The pension can also be secured against the property as a second charge, according to Mr Tavener, to ensure repayment and funding for retirement.

He said: "The benefit of this system is that you get young people enthused with the idea of pensions and the saving habit alongside helping them get on the housing ladder.

"We want to get young people revved up about their pension and linking it to their ability to purchase property is a huge psychological up lift."

Mr Tavener went on to say that although there were schemes in place — like the Lifetime Isa, where the government gives a 25 per cent boost to savings used for house deposits or retirement — these did not include the employer benefit and tax relief experienced in a pension pot.

He said: "The 25 per cent bonus from the government is essentially the same as the tax relief bonus of a pension pot, but under this new scheme the consumer would also benefit from the employer contribution. It’s a win-win — the only sector that loses out in this scenario is the buy-to-let market."

Senior analyst at AJ Bell Tom Selby, who said Mr Brokenshire's initial suggestion "smacked of dangerous political short-termism", said Mr Tavener's suggestion would probably require a change in legislation.

He added: "The most obvious risk would be the person putting all their retirement eggs in one basket — a house.

"If they couldn’t keep up mortgage repayments and end up losing their home, they’ve lost their retirement savings as well."

Baroness Altmann said she was concerned about this proposal as well as Mr Brokenshire's more broad idea.

She said there were many questions about the scheme — such as what would happen if house prices fell or if interest rates rose — and suggested it could stop people putting more into their pension.

imogen.tew@ft.com

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