Ministers just cannot keep their hands off our pensions. Or rather they want us to get our hands on our pensions in order to plough it all into property.
Last week, housing secretary James Brokenshire proposed new powers that would allow people to dip into their pensions to fund deposits for their first homes.
I cannot tell you how much of an idiotic idea I think this is. It is daft on so many levels, and continues to dent confidence in retirement saving.
Let us start with why a housing minister is interfering with pensions, when actually he should keep well away.
Housing and pensions are at totally separate issues, but somehow forever intertwined because of our country’s barmy views about property and investing.
I do not blame Mr Brokenshire’s attempt to find some way to keep the housing market barrelling along; that is, after all, his job.
With prices still rising in many parts of the country and mortgage lending stretched to its limit, developers and estate agents are rightly concerned about where the market is heading.
But to suggest dipping into pensions to fund this and passing it off as some great consumer benefit is disingenuous and poorly thought-through.
Mr Brokenshire thinks it is ‘obtuse’ to deny people the chance to use their retirement savings in this way.
I think it is obtuse to pretend that it does not pose a significant risk to those same savers’ futures.
Ministers seem to think pensions are some magical pot of money that will keep replenishing itself. Perhaps that is because theirs are.
What will end up happening is that young savers will plough money into a pension, and then immediately demolish the great start to retirement planning they have built. You are gaining a short-term benefit at the expense of long-term planning.
And let us not forget we have been here before. In 2011 we had a government consultation on early access to retirement savings, which essentially concluded it was undesirable.
It found the evidence it would have a positive impact was ‘limited or inconclusive’ and that in many cases it posed a greater risk to vulnerable individuals.
In fact, much of the empirical evidence submitted showed it would be damaging, while only anecdotal claims were made that it would be helpful in some cases.
Hearteningly, while some groups thought early access to pensions made them more desirable, there was strong support that it was their inaccessibility that made them most attractive.
At the time, it said that once auto-enrolment was introduced, the government would look again at access to pensions, to discover why people opted out.
But the rather negative assumption that they would opt out never became reality; people are staying in their auto-enrolled pensions. Which just proves that people are happiest when pensions go untouched.
Shock top spot
Two startling bits of Vanguard news. First is that it is now number one on the list of customer favourites voted for by readers of Which. The US low-cost investment firm knocked Hargreaves Lansdown off the top spot, where it had been for several years.
Which readers – middle-class, middle-aged – are not necessarily the type of people I would have thought would be particular admirers of a company such as Vanguard.
Second is that its direct-to-consumer platform now has 50,000 customers, with assets under management of £1.4bn. Around 45 per cent of those investors are aged under 35 – yup, millennials.
It is rather heartening that young people are engaging in saving in this way, but Ido wonder where all this will end.
The growth in passive investing was neatly timed with our 11-year bull run. This has done wonders for returns at very little cost.
But it is when bull runs end that the power of active management really shines through, and when in a tracker you are left powerless to follow the route to the bottom of the market.
A bit on the side
I admit, I have fallen a little in love with the Monzo app when I go on holiday.
It has no charges on transactions and withdrawals on foreign cash. And it pings you a message saying how much it is in pounds.
Very helpful. Despite this, I feel a little dirty.
I want to like Monzo more, but despite pretending to be a bank, it is not.
It is a payments company that doubles as a comparison service.
It may be that I am a fuddy-duddy, and that this is the way of these new fintech companies, but for now I will be keeping all my money in one of the better capitalised mainstream banks and keep Monzo as a financial mistress.
James Coney is money editor of The Sunday Times
