I was chatting with someone about property the other day and I was reminded about an idea that I had a while ago; sharing here for you on this site for the first time.
A solution needs first needs a problem, so what's the problem? Pensions deficits, working lives getting longer, delays and a lack of savings to getting on the housing ladder and a poor savings culture generally - these are real problems of our day that span generations but start with the young and impact us later in life when we can do little to change direction.
My 'big idea' is to create a kind of lifetime ISA & pension combined. Once we start working at say eighteen years old, we start a Government-backed ISA-style investment that attracts tax relief and allowances in a similar way to pension contributions and ISA tax-free returns.
The idea is to create a savings culture, supported by Government tax breaks over a person's effective working life, so aged 18-68 ish. The difference from a pure pension here would be to allow the saver to withdraw some or all of their savings for a house purchase on the condition that the equity used remains a part of their savings plan. We could play around with the numbers to see if an interest rate is paid back to the savings pot or just the capital growth. Lots to consider but it would go a long way to fixing two issues at least - house purchase and pension savings. A similar approach is adopted in Brazil i.e. allowing people to use their pension to buy a house...so why not adopt a similar approach in the UK? Then we also create a pension directly linked to a person's own lifetime earnings and savings, thus taking some of the stress away from the current system where current workers pay for current retirees and ever-worsening ratios.
What do you think?
Image credit: Vjeran 2001
[…] A solution needs first needs a problem, so what's the problem? Pensions deficits, working lives getting longer, delays and a lack of savings to getting on the housing ladder and a poor savings culture generally – these are real problems of our day that span generations but start with the young and impact us later in life when we can do little to change direction. My 'big idea' is to create a kind of lifetime ISA & pension combined. Once we start working at say eighteen years old, we start a Government-backed ISA-style investment that attracts tax relief and allowances in a similar way to pension contributions and ISA tax-free returns. […]