Research funded by B&CE Benefit Schemes and Legal & General found that the people saving the least for retirement – women, low earners and young people – would be more inclined to put money away if they could access it in times of financial hardship.
But the report warns that if withdrawals are allowed without restrictions Britain’s pension provision could reduce by 7 per cent.
It proposes a number of ways of allowing access to savings such as the loans and withdrawals model used in the US which permits people to take loans from their own pension fund which they must pay back with interest.
PPI research director Chris Curry says: “The loans system is well established in the US and evidence suggests this early access increases both the number of people saving and the amount they save, even though only around 20 per cent of people make use of the early access facility each year. If a similar system were introduced in the UK, this could increase aggregate pension savings by around 30 per cent by 2050. However, if people in the UK did not increase their contributions, or did not repay their loans, then pension funds could be 7 per cent lower.“