I do not know if Sir Steve Webb is going to be a renter in his retirement but I think it unlikely. Unless he gets severely unlucky in his late career I suspect that his children will enjoy visiting him at his home – and the prospect of one day having a home (maybe even that home) of their own.
At last weekend’s FT festival, Steve debated the tough choices that Generation Rent have between funding a pension and buying a property of their own. It’s tough renting (especially in London)
Generation Rent has a lot of angst in renting right now, tenants now have to submit a personal statement for the scrutiny of landlord, the quality of the covenant now determines what you can rent and how much you pay for it. Small wonder many who have not yet got on the housing ladder, yearn to take that first step.
The pension from Mum and Dad
Claer Barrett, who both chaired and reported on the weekend event, led a discussion on intergenerational wealth planning
Nimesh Shah, chief executive of Blick Rothenberg, became a father for the first time in January. “To my wife’s disbelief, I started a stakeholder pension for my daughter the day after she was born,” he confessed to rapturous applause from the audience.
However, Sir Steve Webb, partner at LCP, said he would not consider funding pensions contributions for his children, who are in their 20s. “As an ex-pensions minister sitting in a pensions tent, I recognise this is borderline blasphemous,” he confessed.
“But neither of my kids are homeowners, and the nightmare scenario for their retirement is having to fund paying rent out of their pension.”
“While I am quite in favour of pensions, auto-enrolment and perhaps something beyond if your employer will match this, I do not want my kids to be renters in retirement.”
Webb, who appears more active than ever, may well be the banker of last resort for his children, more likely than their secondary pension sponsor.
Later life security is an issue for every well-heeled middle class parent and indeed grand-parent, but wealth is more likely to pass through generations through housing – than through pensions. Steve Webb may not have got “rapturous applause” for what he said, but he is right.