Can fairer housing policy boost pensions?
I would be willing to guess that people are more likely to have a pension if they already own a home. Not only because homeowners are probably older and thinking seriously about their retirement, but also because those without their own home aren't going to squirrel money away for a very-distant future if they haven't got their own bricks and mortar.
I attended a pensions conference last week hosted by the Association of British Insurers. During one panel debate it was suggested that in order to resolve the lack of saving into pensions in the UK, especially by young people, we first needed to sort out our housing policy.
It was argued that young people aren't going to save for their retirement when they are busy saving for a deposit but because of ludicrously high house-prices they will be saving and buying property later and later. Subsequently they will start saving for a pension even later and more than likely fail to amass enough money to live a decent lifestyle in retirement.
The panel said the pensions industry should stand united against the banks and pressure them over their unfair and obstructive lending policies if it wanted young people to jump aboard the saving train.
This is a very noble sentiment but unfortunately the banks don't set house prices and whether people can raise a mortgage or not is not the issue – they can't even get enough deposit together to take the step on to the property ladder.
Affordable housing, or the lack of it, is the reason that people aren't buying. And although house prices may seem far removed from pensions, the fact is that until people have the safety net of property they definitely won't be saving into a pension.
The fact is that we are a nation that believe property is a safer bet financially than saving into a pension. We can touch bricks but pensions are alien and far-removed from our every day lives. Even though pensions offer a fantastic tax break we shy away.
If the government really wants people to save more for the future then they need to help people to live the way they want to in the present as well.