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Early access to pension savings
In the Coalition Agreement, the Government pledged to explore the potential to give people greater flexibility to access part of their private pension savings early. On 13 December 2010, HMT issued a call for evidence on the subject.
The call for evidence set out the existing arguments that suggest early access to pension seavings could provide an effective incentive for individuals to start saving or save more into a pension, and also outlined some of the different models for how early access could potentially be offered.
On 19 April 2011, the Government published a summary of the views and evidence received. Following consideration of the responses, the Government has concluded that early access to pension savings should not be considered at the present time on the basis that:
- there is limited evidence that allowing early access would have a positive effect on overall pension contribution levels, or provide significant help to individuals facing financial hardship; and
- the extensive private pension reforms already planned, most notably the introduction of automatic enrolment from 2012, should be implemented before the Government considers further reform.
However, as the responses indicated support for the "feeder fund" model, the Government intends to engage with industry to further develop innovative workplace savings models that will encourage saving for both medium term neeeds and additional retirement income.
Author: Georgina Beechinor