The past two weeks have been a busy time for politicians and those of you trying to keep track with how government proposals will affect you and your clients. First we had TheTurner Report – A new Pensions Settlement for the 21st Century promising to overhaul how people save for retirement. While attempting to deny there is a pensions crisis, it recognises something has to be done to stop baby boomers ending life on the breadline.The report warns that while saving through house purchase and inheritance of housing assets can contribute to pensions, housing alone is not a panacea. While Turner realises that for most people housing assets are far more important than stocks and shares, he warns of the risks involved. Turner states: “Analysis of the risks involved in savings through the housing market, and of the distribution of the ownership of housing wealth, shows housing cannot be a sufficient answer to pension adequacy problems for all people.” Less than a week after the report – with which Gordon Brown is said to be none too happy – the Scot stood up to deliver his pre-Budget statement. He once again tried to appease aspiring first-time buyers, announcing the extension of shared ownership schemes, in partnership with three lenders – HBOS, Nationwide and Yorkshire. Advisers must be relieved to see the government finally including commercial operators in its plans as this must increase the chances of something actually happening. But don’t get too excited. FTBs will have to wait until the end of 2006 for the pilot scheme. The government already planned to offer more than 20,000 Open Market HomeBuy equity loans between 2005 and 2010. But with lenders part-funding them, that number could rise to 40,000. Under Open Market HomeBuy, the borrower will get a 75% mortgage, a 12.5% equity loan from the same lender and a 12.5% equity loan from the government. The problem is that, once more, the scheme will only be open to key workers, social tenants, those on the housing register and other first-time buyers identified as priorities by regional housing boards. Your average client is unlikely to benefit. So, while the government should be applauded for making some effort, the average earner is still going to struggle to become a home owner. A final, surprising inclusion in the pre-Budget statement was that residential property will be prohibited from inclusion in self-invested personal pensions – a blow to advisers who were recommending this as a good tax saving option after A-Day.rosemarygallagher
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