- Liberal Democrat leader reveals plant to let parents and grandparents use pension funds to guarantee mortgage deposits for first time buyers
- Critics say the 'gimmick' proposal would only apply to the well-off who can risk losing some of their hard-earned retirement savings
By Tim Shipman and James Salmon
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Parents and grandparents should be able to use their pensions to help their children get on the housing ladder, Nick Clegg suggested yesterday.
The 'pension for property' plan aims to let those approaching retirement borrow against the lump sum payment in their pension to underwrite the mortgages of young people who cannot afford to buy a home.
Up to a quarter of a pension pot can be paid out in a lump sum when someone retires.
Pensions-for-property: Deputy Prime Minister Nick Clegg says young people need help to buy a home.
The idea is that the cash would not actually leave their fund but be used as a 'guarantee' that the house-buyer would repay the home loan.
The relative would lose the money only if the loan repayments were not made.
The Deputy Prime Minister revealed the plans in an attempt to show that the Government is helping people who have worked hard but cannot afford to give their own children a helping hand.
But the plans rapidly began to unravel last night as it became clear that only a small minority of families would be able to take advantage of them.
Critics said they were a 'gimmick' which would apply only to the well-off who can afford to risk losing some of the money they have saved to finance their retirement.
IS THE THREAT TO CLEGG'S LEADERSHIP JUST GOSSIP?
Former Lib Dem leader Sir Menzies Campbell (pictured) today called for an end to 'gossip' about Nick Clegg's future at the helm of the party.
Mr Clegg was again dogged by rumours of plots against him today, with Vince Cable, the Business Secretary, and party president Tim Farron, said to be favourites from the left of the party, while Ed Davey, the Energy Secretary, emerged as the standard bearer of the Lib Dem right.
A poll of Lib Dem members by website LibDemVoice revealed his personal rating has fallen below zero for the first time, to minus 2 per cent.
But Sir Menzies, who was ousted as leader weeks after a doomed party conference in 2007, today tried to end the speculation.
'I think this scuttlebutt, this gossip should be put to rest once and for all,' he told PoliticsHome.
'If you are serious about the kind of things we've been discussing today, then the person who is best qualified to take us forward is Nick Clegg.
'I am unequivocal in my support for him and so too should you be and so too should members of Parliament and, indeed, the people in the House of Lords as well," he told a fringe event at the party conference in Brighton.
Jo Swinson, a former aide to Mr Clegg promote to become a business minister in the reshuffle, insisted there was no question of her colleagues rounding on their leader.
'Absolutely not. The parliamentary party sees the job that Nick is doing very, very skilfully in government.'
Matt Chorley, MailOnline political editor
The Liberal Democrat leader told the BBC's Andrew Marr: 'At the moment 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.
'The Government is going to do something which hasn't happened before - we're going to work out ways in which parents and grandparents [can] help their children and grandchildren buy a property of their own.'
Mr Clegg's aides said there are currently 250,000 households in Britain today where someone has a pension pot worth around 40,000, the minimum sum that would be needed to take advantage of the scheme.
But experts were swift to point out that millions of others would not have the chance to help out because their pension pots are too small. The average pot is just 26,000.
Following talks with pension and mortgage providers the Lib Dems admitted that only around 12,500 families would be likely to take up the offer.
Dr Ros Altmann, director general of over-50s financial group Saga and a former Downing Street pensions adviser, said: 'This looks like a political gimmick.
'I'm afraid this sounds like a scheme for kids of relatively well-off parents or grandparents.
'Most people do not have that much money in their pension scheme, and just pledging their lump sum to their offspring is hardly likely to solve the problem of unaffordably high house prices.'
Joanne Segars, chief executive of the National Association of Pension Funds, also questioned whether the scheme would work.
'At first glance this idea leaves us feeling slightly uneasy,' she said. 'This policy could end up leaving retirees out of pocket. The UK already has a serious problem with people saving too little for their old age.
'The Government has already looked at letting people have early access to their pensions and decided it against it. People need to keep their pension for their retirement, especially with rising longevity and the costs of long-term care.'
The Association of British Insurers said it would examine the details more closely but echoed those concerns. Director general Otto Thoresen warned: 'Pensions are designed to mature into a decent retirement income, not for other purposes.'
Adam Marshall of the British Chambers of Commerce said: 'It sounds like robbing Peter to pay Paul. Employers pay into pensions too, and would be unhappy to see money used this way.'
Pensioners are already funding their children and grandchildren by keeping them at home. Wake up Cleggy, did you momentarily fall asleep when you were composing this load of codswallop.
- albert hall , hove, 24/9/2012 06:43
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