Early pension access may encourage savings

Posted on March 16th, 2011 | Categories - Pensions

Flexible access to pensions could result in higher retirement savings in the long run.

Any scheme which allows people to dip into their pension savings should not be too complex for savers to understand.

Early access to pension savings could benefit savers and encourage them to put more cash away for their future, according to online insurance firm LV=.

The firm put forward its view to the Treasury earlier this year, supporting proposals to allow people to get hold of their saved pension capital before they hit the age of retirement.

It’s own research suggested that more flexibility around accessing funds at a number of stages, such as after the birth of a child, would lead 24% of over-50s to save more.

Retirement solutions director at LV= John Perks said: “We believe that allowing people early access to their pension savings would be of significant benefit, and would encourage people to put more away for retirement.

However, he added that while the firm is “behind the idea of early access to pensions, the process of doing so should not be made too complex for either consumers to understand or providers to implement”.

Mr Perks added: “There needs to be a clear set of industry-wide guidelines created, stating under which circumstances people would qualify for early access, and consumers must be warned about the impact on future retirement income”.