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15 Jul, 2019/ by Homeward Legal /First Time Buyer

A proposal from a government minister that first-time buyers be allowed to use their future retirement pot to help them buy a home has been backed by a pension firm.

In June, Housing and Communities Secretary James Brokenshire told the Policy Exchange think-tank that his was a personal idea for a "new deal with the British people".

Now Scottish Widows has said it believes the idea is a good one and is, in fact, developing a workable plan that would encourage 3.5 million people over the age of 30 to save more for their retirement.

Current Treasury rules mean that any savers accessing their pension early must pay 55 percent tax on the proceeds while the provider may charge up to 30 percent, which makes the idea a non-starter right now.

Scottish Widows suggests the increase in contribution rates would be one way of working around the issue, with those saving for a pension putting 15 percent of their salary into a pension pot. That would include 10 percent from their employer with Scottish Widows saying the government could offer an annual contribution of £500 to top up the funds.

Speaking to The Times, Peter Glancy, Scottish Widows pensions chief, said: "This is a radical idea. However, we have done testing and modelling and can demonstrate that, alongside our other proposals to increase overall savings levels, this would help secure the financial future of millions of people into old age."

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