Pensions  

Industry warns on pension change eyed by minister

Mr Selby said: “If you divert pension money towards house purchase when retirement provision is already far too low for millions of people, it’s simply pushing one problem onto another. 

“If you think of someone earning £30,000 paying in at the auto-enrolment minimum of 8 per cent, if we assume band earnings are scrapped (as the government has proposed) it might take them four years to build up a £10,000 fund. 

“If they are then able to drain that to buy a house, they’ll have to start saving for retirement all over again and the challenge of building a decent pot will be that bit harder.

“There’s also a fair chance this would simply pump up house prices, so no guarantee it would actually make property more affordable for anyone.”

He also warned early access would create extra complexity in the pension tax rules, which are “already too complex”. 

Mr Selby added: “I’d also argue there are other circumstances, such as someone facing serious financial hardship, that merit early access more than wanting to buy a house. 

“I think the ‘sidecar’ idea, where a small pot of emergency cash is built alongside an auto-enrolment pension, merits further investigation provided it can be introduced in a way that is simple and easy to administer, as this could help improve financial resilience without undermining retirement saving in the UK.”

amy.austin@ft.com

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