Thanks to James Hawkins for this super-interesting post that takes me back to the first fifteen years of my working life when I was supposed to be selling pensions but ended up selling mortgages to first and second generation families living in Stoke Newington, Poplar, Stepney and Dalston.
The communities I found myself working with had little interest in the stock-market or funds or tax-relief. They were largely self-employed or paid themselves dividends from their businesses rather than receiving a salary. They saw the capacity to borrow as critical and I was much more in demand as a mortgage broker than a pension adviser.
Where pensions came into it was
a. where the mortgage was set up “interest only” but with the projected tax-free cash considered a repayment facility. This idea of a “pension mortgage” was popular in the late eighties and early nineties though it was quickly stamped on when lenders pulled in their horns during the horrid years of double digit interest rates. As mortgage defaults soared, the pension plans were usually abandoned, the pension mortgage was more about getting finance than financing retirement.
b. where a limited company was interested in purchasing the freehold or a long-lease on a company, then properties could be purchased into a Small Self Administered Scheme so that the pension became the property and ultimately vice-versa.
Sadly I’m not in touch of many of these clients thought I remember happy nights at weddings and other parties , discovering the diverse delights of middle east , African and far eastern cultures.
I learned that elderly parents expected (and got) support from children – both in terms of income and healthcare. Most families wanted self-sufficiency and independence from the financial services they were offered (which they didn’t much understand, trust and want).
That is – except finance – which was the one area where I thought I could help. Nowadays, there are ambulance chasers busy trying to convince those sold pensions as a means to get a mortgage they were mis-sold.
I suspect mis-selling did occur but as with equity release, a fundamentally sound concept that was brought into disrepute, might be revived to meet differing needs and a more protective regulatory climate
I don’t have so much dealings these days with immigrant families but still have friends from those days. I suspect that as times change, the distrust of financial services reduces and more mainstream savings into funds and even annuities increases. The use of common technologies is speeding up integration.
But this integration is still sporadic. Spend time on the high-streets of Hackney or Hounslow to see how cultural divides persist in how different ethnicities spend money.
Housing remains a higher priority for low-wealth immigrant families than for the mass-affluent. Pensions are less important for most immigrants than they are for people like me.
We cannot underestimate the security of a long-term heritage as UK residents and the insecurity of first and second generation immigrants. Even here in London, where immigrants are often in the majority in local communities, we find intolerance and hate which forces immigrant families to retreat towards the certainties of family support and the value of home ownership.
The second and third generations of immigrant families increasingly are in jobs that carry salaries and workplace pensions, many are in the public sector where the pension is integral to the job. But the allure of home ownership persists as the primary driver of family security.
I would be interested to know how many of the people using lifetime ISAs and other schemes designed to help people onto the housing ladder are from non UK ethnicities. If the answer is “a high percentage”, then perhaps the answer is to promote double saving with the lifetime ISA providing the deposit and the pension providing repayment.
The Lifetime ISA may be as much an ethnic friendly product as the pension mortgage. What is not to like about marketing pension saving as a means to home ownership rather than an alternative
why not both?