Radical new proposals have called for Brits to be allowed early access to their state pension if it helps them get on the property ladder. The plans would let first-time buyers use their retirement pot to put down a deposit, whether it comes from a state or private pension.
Ministers are reportedly open to this idea despite concerns from pension specialists regarding the long-term impact on retirement incomes, according to GB News. The Citizen’s Advance scheme, put forward by Andrew Lewin of Welwyn Hatfield and the Social Market Foundation, would people who have worked for at least 10 years to take out 12 months of state pension payments as a lump sum. However, it means they would have to postpone their retirement by the equivalent period.
Mr Lewis said: « I think the Citizens Advance could have a transformative impact on people who need extra help to get on the housing ladder, or might want to spend a few months off work to support a new young family. »
Investment firm Schroders also presented a plan to ministers that would allow workers to take money out of their private pensions to buy a house.
Solutions executive chairman James Barham revealed that they responded positively to the scheme.
Ronan O’Riordan, of Schroders, added that giving people early access to their pension could actually make them plan for the long-term better.
He said: « The word pension to many is something really far away what we’re trying to do is make a system where if you’re able to save, say 8% of your salary and then save a little bit more, you can access that early so you can have your deposit for your first house much quicker.
« One of the benefits of that is that it could increase conversations among peers around their extra savings, and getting them engaged early could have a compounding effect. »
This comes as state pensioners face a double tax raid in the coming months.
The state pension is set to increase by 4.7% in April due to the triple lock, making it worth more than the annual tax-free income allowance from 2027 and forcing most pensioners to pay tax.
Money reporter Imogen Tew explained that pensioners face higher taxes on the money they withdraw from their retirement savings and on the money left in the bank.
