It’s conference season and as all of our mainstream political parties get together to discuss the issues of the day, one of the ‘ideas’ recently proposed by Nick Clegg was allowing parents and grandparents to use their pensions to help fund property deposits for younger family members.

I’m sure over the course of the next few weeks you’ll hear ideas from all the political parties.  I’m sure if you’re anything like me, you’ll agree with some of the ideas, feel ambivalent about others, and disagree with the rest.  With the “pensions as a property deposit” idea I sit firmly in the disagree camp.

Firstly, pensions are designed and structured to help individuals save for retirement.  Whilst there is an argument to say that changes should be made to the rules surrounding accessibility of pensions and the options available at retirement, muddying the waters by potentially changing the purpose of saving in a pension scheme isn’t one of them.  By suggesting that in the future your pension pot could be used for both your retirement and a deposit for your children’s house makes the ‘purpose’ of a pension scheme incredibly vague.

Secondly, the impact on the retirement incomes on parents and grandparents if they were required to take a chunk of money from their own schemes to help their children and grandchildren could be dangerous.  The mechanics of a scheme like this haven’t been established, but I’m wondering whether the implications on the pension holders and their retirement incomes has been thought through.

Lastly all our political parties seem to believe that by introducing “Bells and Whistles” to existing pension schemes will be an incentive for more people to save.  This approach has never worked and whilst previous ideas which have been implemented (for example, the introduction of more investment flexibility via a SIPP) have provided more options with individuals with significant pension pots, it hasn’t done much as an incentive to save for retirement for the majority of the UK population.

I believe that Auto Enrolment will go some way to solve this problem.  However I also believe that ensuring individuals understand the why saving for retirement is so important (and the implications if individuals choose not to) should be our primary focus.  If we work harder as a society to ensure that everyone understands the importance of saving for retirement the longer term benefits for all of us should be worthwhile.

As ever this is just my opinion.  I’m interested in knowing your thoughts.  I look forward to hearing from you.