UK Deputy Prime Minister Nick Clegg has proposed that working parents should be allowed to use their pension savings to help children acquire their first home, according to the Financial Times.
“The government is going to do something which hasn’t happened before – we’re going to work out ways in which parents and grandparents who want to help their children and grandchildren buy a property of their own.”
Clegg added: “We’ve got thousands of young people who are desperate to get their feet on the first rung of the property ladder but deposits have doubled and the number of young people who are asking help from family members to get a mortgage has doubled.”
Described as the “pension for property scheme”, his Liberal Democrats party is now in talks with mortgage lenders and pension providers on how to implement this move.
Advisers estimate that around 250,000 people will be eligible for the scheme, with 12,000 likely to take advantage of it. However, savers will need to have about £40,000 (S$79,677) in their pension pot, notably higher than the average pension pot of £26,000 (S$51,790).
Meanwhile, many details have yet to be worked out, including what would happen to the lump sum pension if it was used as a guarantee for a loan.
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