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Early access to pay for deposit on first home

The Government should consider allowing people early access to their pension savings to fund deposits for their first home, according to the work and pensions select committee.

The committee’s report into auto-enrolment, published last week, says evidence from New Zealand’s KiwiSaver scheme suggests the idea could make pensions more attractive and lead to lower opt-out rates.

Savers in New Zealand can withdraw money from their pensions, minus state contributions, to buy a first home or in times of financial hardship and in some cases are eligible for a first-home subsidy.

In December 2010, the Government consulted on allowing early access to pension funds but rejected the idea in April 2011 due to a lack of evidence of the affect it would have on private saving levels.

Milford and Dormer financial services manager Jonathan Hill says: “Politically, it is a great idea and people will like it but trying to make it work without undermining pensions is very hard.”

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