The number of young people saving for their long-term future could rise significantly if
ISA and pension savings were brought together in a single tax incentivised system, allowing young people to use the assets they have built up to get onto the property ladder, according to the Occupational Pensions Trusts’ (OPT) Ben Shaw.

Shaw, who is development director of OPT, explained that by combining ISA and pension savings - in which assets could be used to buy a house - support for the proposed National Employment Savings Trust (NEST), would “explode”. Younger people in particular find it difficult to see a pension as a number one priority when they have much more immediate priorities, such as buying their first home.

“We are at a point where the decisions being made will be with us for many years so we need to think radically and get them right,” said Shaw. “There are already proposals to merge ISAs and pensions and a review of NEST on the cards. But the one idea that would guarantee take-up of pensions and NEST to explode among the young would be to give the flexibility to earmark part of those pension savings for property purchase.”

He explained that if people in their 20s knew that from the moment they invested the first pound that they were building up a housing deposit in a tax-efficient, flexible manner they would be much keener to save for their long-term future.

“In turn,” Shaw continued, “that would deliver better pension outcomes later in life when growing numbers will have to depend on their main property asset to supplement their income and subsidise care costs, either through downsizing or equity release.”

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