Goverment says no to early access to pensions
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Last week the Government announced that it is to shelve plans to allow investors to dip into their pension pots before the minimum retirement age. In the US, investors can access their pension pots in special circumstances such as to help pay medical fees.
It was hoped that the measure would encourage more pension savings because people would have a greater sense of ownership. Mark Hoban, Financial Secretary to the Treasury, said: “While early access has some merits, there is insufficient evidence to suggest it would act as an incentive to save more into pensions.” The detractors argue that it would make the system more complicated and actually reduce pension savings.
I understand both arguments but would like greater access to pension pots in times of financial need but with adequate safeguards. One of the biggest barriers to pension savings is a lack of ownership or involvement. For many pensions are a black box in to which they pay hard earned cash and which they cannot get their hands on until they retire.
If pensions were more accessible would it result in people investing more money in them because they would have a greater sense of ownership and control or would it simply mean people would raid their pots leaving less money to provide income when they retire.? I don’t know the answer but I do remember seeing a package on BBC Newsnight a few years ago where a lifeguard holding his surf board on the beach was interviewed about his pension. He said something to the effect; “I am proud of my Super (pension), all my friends have one and its important to save for retirement.
If we could find a way for our youngsters to take pride in their pensions we would be making progress. Early access may not be that key, but we must find what the key is.