Madison Burgess
With the cost of living soaring, jobs hard to come by, and renting becoming more expensive than ever, for a lot of Gen Z and Millennials, buying a house feels like an impossible task.
But a radical new policy proposal could give young people the boost of money they need to get on the property ladder earlier.
Described as a 'state alternative to the Bank of Mum and Dad', the think tank, the Social Market Foundation, has called for a £12,500 advance pension payment to be offered to those who have worked for ten years.
In a nutshell, it would mean that those of us Brits who have built up 10 years’ worth of National Insurance contributions would be able to get some of our pension cash early.
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As reported by MoneyWeek, this means that at the current full new state pension rate for a year, people using the scheme could get £12,547, decades before they actually reach state pension age.
While the money can be used for anything, it will be a huge helping hand for those saving up to buy a house.
The lump sum would come in exchange for postponing the point at which they start receiving their state pension by an extra year.
Explaining their motivation for the scheme, dubbed the Citizens Advance, the SMF said: “Britain is a place where wealth matters, and personal and family wealth levels can alter the course of people’s lives.
“The ‘Great Wealth Transfer’ will see £5.5 trillion passed down by Baby Boomers over the next two decades, but just a third of adults expect to benefit from inheritance.
“As the Great Wealth Transfer takes place, the sense of injustice around wealth inequality may only therefore increase without government action. Something has to give.”
As for what people think of it, data collected by the think tank found that 25- to 40-year-olds were in favour of the Citizens Advance, irrespective of whether they would take it, with 54 per cent positive responses versus just 6 per cent negative.
A majority of the age cohort said they would take the Advance, ranging from 50 per cent to 70 per cent depending on the value of the lump sum, length of state pension forsaken, and restrictions on how it can be spent.
The SMF says that the landmark policy could be delivered for £1.3 billion in year one, depending on how eligibility is set; means testing, taxing, or restricting the uses of the Advance would trim costs further.
It points out that crucially, the spending on the Citizens' Advance is ‘largely recouped from savings to the pensions system and wider economic benefits’.
So, if given the chance, would you take the money?