Scottish Widows Recommends Pension Access

Scottish Widows, a life insurance and pensions company, is advocating for new pension rules that would allow young savers to withdraw up to half of their early retirement pot to fund a deposit on their first home. The firm argues that while this may deplete long-term savings, it could be offset by increasing overall savings levels. They said, “while some critics may argue this further depletes the long-term savings of young people, it is advocating for further changes that will increase savings levels overall to account for this”.

To achieve this, Scottish Widows proposes reducing the age for auto-enrollment in pensions to 18 and increasing minimum contribution levels to 15% by 2030, with costs shared between employers and employees. The company also suggests an annual government top-up of £500, similar to the model used in Help To Buy and Lifetime ISAs.

Research conducted by Scottish Widows found that over 3.5 million young people are interested in accessing their long-term savings to help them buy their first property. In a survey, 38% of respondents under 30 said they would save more into their pension if they could use these savings to help fund a deposit on a first home.

Pete Glancy, head of policy at Scottish Widows, stated that property ownership is a long-term investment that could support people into old age by avoiding expensive renting costs or providing a source of equity. He acknowledged that many young people prioritize getting onto the property ladder ahead of saving into a pension. He emphasized that the proposed policy is aimed at helping young people transition from renting to owning, not to increase housing demand, and that appropriate government policies are still needed to ensure adequate housing supply and affordability.