Nick Clegg has just announced on the Andrew Marr show today that parents will soon be allowed to use their pension pots as guarantor for their children's mortgages.

This is yet another desperate move to keep house prices up whilst those without wealthy parents sit renting for the rest of their lives with no hope of ever owning a house.

The announcement By Nick Clegg came while he was defending his calls for the wealthy to be made to pay more tax and the proposed introduction of a tax on the more expensive houses.

I realise that the details are yet to come out, but this idea of allowing pensions to be used to guarantee mortgages seems to fly in the face of everything else the government is trying to do.

For example:

People are being forced (well they have to actively opt out) to join occupational pension schemes from this October onwards in order to save for their own retirement, so how can then using it as a savings scheme for their children's house purchase square up with that?

The government say they want banks to lend and can make them do it, so why are they now advocating that pension pots are put at risk as guarantees for house purchases? This is an admission of failure.

How about a fifty year old who uses this scheme, how can they draw on their pension while it is still guaranteeing a 25 year mortgage? Does this mean they will have to wait until they are 75 before they can retire? Or will the tax-free lump sum they are due when they retire be used to pay off or part of the mortgage off?

What happens of their offspring defaults, what happens to the parents pension pot?

How much mis-selling of pension pot mortgages do you think will occur?

Nick Clegg

Nick Clegg (WEF)

Finally, how many people, apart from millionaires and politicians, actually have a pension pot large enough to achieve this? And remember that pension pots are at their largest when the saver is near to retirement.

This sort of initiative is once again only beneficial to a wealthy few and will be used to give the impression of 'doing something'.

This announcement shows just how desperate the government is to keep the whole property market from slowly collapsing around its ears. The trouble is that the slide has started and none of this tinkering will halt it until the average house price is about two and a half times the average wage. At present the average wage is about £26,000 and the average house price is some £160,000, that's over six times that average wage.

Image by World Economic Forum from Cologny, Switzerland [CC-BY-SA-2.0 (], via Wikimedia Commons

Comment Here!