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NAPF uneasy over pension proposals

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The National Association of Pension Funds (NAPF) yesterday reacted "with unease" to reports from the Lib Dem party conference in Brighton that they want home ownership to be boosted by allowing younger family members to secure mortgages against part of the pension pots of older family members.

The Department for Work and Pensions has announced that it working with the Treasury on plans to allow parents and grandparents to use up to 25% of their pension to guarantee first-time buyer mortgage deposits by setting aside part or all of their future tax-free cash lump sum entitlement.

Joanne Segars, NAPF chief executive, said: "There are housing market tensions that need addressing, but we wonder if this is a good solution. We need to see more detail on how this might work.

"At first glance, this idea leaves us feeling slightly uneasy. A pension can only be spent once and 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."

She added: "The Coalition Government has already looked at letting people have early access to their pensions and decided against it. People need to keep their pension for their retirement, especially with rising longevity and the costs of long-term care."