First-time buyers should be allowed to their pensions for cash minister says

 First-time buyers could be allowed to dip into their retirement savings to get on to the property ladder, the pensions minister has said.

Guy Opperman said he is exploring ways pensions could be used to fund deposits in a bid to help young savers locked out of the housing market.

But the idea was attacked by industry experts, who said it would undermine efforts to get individuals to save more for their old age – and push up house prices.

UK savers cannot currently access defined contribution pensions before the age of 55 without incurring hefty tax penalties.

Mr Opperman told an online seminar hosted by Prospect magazine yesterday that he was ‘curious’ to see if young people could borrow money from a workplace pension for a housing deposit. 

However, he stressed the idea was not being examined by officials.

 It was condemned by Tom Selby, senior analyst at investment platform AJ Bell. 

He said: ‘At its worst this reform risks exacerbating the problem of chronic under-saving for retirement with no guarantee it will actually help would-be property owners.’   

If a 30-year-old took £23,500 out of their pension for a 10 per cent deposit on the average UK house price, their retirement pot would be cut by £136,107 if they retired aged 66, according to AJ Bell.

The idea was floated by then housing secretary James Brokenshire in June last year. 

Phil Brown of pension provider The People’s Pension, said it was disappointing that ministers had not ‘closed the door on a policy which would further inflate the bubble in the housing market, deplete young people’s retirement savings and transfer that money to older people selling property.’