The Financial Conduct Authority’s (FCA’s) recent comments on the potential use of pension savings for house deposits have sparked debate, and for good reason.
As the regulator noted, it’s time to stop thinking about “pensions, mortgages and savings as separate tracks.”
Trying to view these areas of our client’s financial health as distinct, single issues is not good enough; we need to consider them together, given the challenges faced by those looking to both build a pension pot and take their first steps onto the housing ladder.
The FCA is exploring whether savers should be allowed to draw on part of their pension savings in order to get a foot on the property ladder, something which is already possible in countries like Canada and New Zealand.
While the idea will raise eyebrows among some, it’s being floated in the context of a housing market where prices continue to climb and saving for a deposit has become increasingly difficult.
For many would-be homeowners, the dream of buying is being steadily eroded by cost-of-living pressures, stubbornly high inflation, and wage stagnation.
Meanwhile, pension pots remain largely ring-fenced, even though they may represent one of the most significant financial assets a person holds.
From the FCA’s perspective, allowing some flexibility could unlock homeownership for more people and make long-term financial planning more adaptable.
But it also raises crucial questions about how we support people in making the right choices – and that’s where financial advisers must play a central role.
A rounded service
The drive to provide joined-up advice, and take account of a client’s entire financial circumstances, is something important to us at Rosemount.
Across the network we have seen growing interest from our members in broadening their own businesses, and taking on a more holistic approach.
Advisers increasingly don’t want to just focus on the mortgage or the pension in isolation, but instead provide their clients with a more rounded view of how each product area interlinks and what that means for their overall wealth plan.
Taking that step towards offering more rounded financial advice means the client receives a better service, but it also helps the adviser build a strong and more robust business. It’s only possible if the adviser can access the right support, however, such as through bespoke training, tailored masterclasses or peer-to-peer learning.
When people are faced with complex decisions like whether to use pension funds as a deposit, they need guidance from someone who can take in the whole picture – understanding not just what’s possible, but what’s right for that individual’s future.
Advisers need to consider not just how they can diversify their skillset, but how they can access the support necessary to make that shift a success.
This debate isn’t going anywhere
Whilst the idea of accessing pensions to support a property deposit is good in theory, the FCA will face an uphill struggle in persuading the Government, HMRC or the Treasury to agree, particularly at a time when the tax benefits of pensions are slowly being whittled away, rather than being improved on. However, I do commend the FCA for floating the idea. It would be pleasing to see this become a future pension policy.
After all, the reality is that the housing affordability crisis isn’t going away. The market continues to see supply squeezed and prices pushed upwards. For first-time buyers and younger generations in particular, new solutions will be essential, and that may include pension-backed deposits.
But innovation must be coupled with responsible advice. Giving people more options is only empowering if they also have access to expert support in weighing them up. The risk otherwise is that short-term goals undermine long-term security.
That’s why this conversation from the FCA should act as a wake-up call. It’s not just about pensions or mortgages, but rather about bringing every strand of someone’s financial life into one plan, with one trusted adviser helping them steer the course.
Now is the time for advisers to step into that role. And for the industry to back them in doing so.
Ahmed Bawa is CEO of Rosemount Financial Solutions (IFA)
