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May 2011
Government Says No To Early Access to Pension Savings
The government has decided to rule out further consideration of early access to pension savings for the time being.
Its decision, announced on 19 April, followed a call for evidence by HM Treasury, which was launched last December and closed in February, on whether early access could act as an effective incentive for individuals to save more into a pension.
Responding to the call to evidence – which attracted more than 100 responses, including from more than 60 organisations representing major pension providers and schemes, consumer bodies, think tanks and other financial service providers – Mark Hoban, financial secretary to the Treasury, said the government was committed to improving flexibility over savings, to encourage individuals to either start saving or save more.
But following consideration of the responses received, it had concluded that while early access to pension savings had “some merits”, it should not be considered at the present time on the basis that:
- there was limited evidence that allowing early access would have a positive effect on overall pension contribution levels or would 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, the government would engage with industry to further develop innovative workplace savings models to encourage saving for both medium-term needs and for additional retirement income.
Mr Hoban said the government would also explore reform to improve flexibility for those with very small levels of savings in personal pension schemes, and publish further details in the autumn.
