Upcoming Treasury proposals which could allow savers to access a 25 per cent lump sum from their pension fund early may be the first step towards an integrated Isa/pension regime, according to Suffolk Life.
This morning, Money Marketing revealed Government officials are preparing to issue a consultation before the end of the year seeking views on whether the policy could boost saving and the circumstances under which people should be allowed to access their savings pot early.
Suffolk Life marketing director John Moret (pictured) says the proposal could be a step towards a merging of the pension and Isa systems in the UK. He urges Government to present a “clear picture” of how it sees the two regimes co-existing in the future.
He says: “I first proposed early access 10 years ago. At the time no one, including the Tories, were interested. If only the politicians had listened maybe we wouldn’t have the problems with long-term savings that we have today.
“The main problem I have with the suggestion is the lack of clarity around the role of short-term and long-term savings. What we need is a clear picture and statement of how the Government see the two regimes co-existing, although perhaps this is another stepping stone towards the integrated Isa/pensions regime that Michael Johnson and others have been pushing for.”
While several potential models of early access were outlined in a Pensions Policy Institute paper in November 2008, pensions minister Steve Webb has previously indicated a preference for the 25 per cent lump sum model as it “chimes with what’s already in the system”. From April next year, the age at which people can take a 25 per cent of their pot pre-retirement will increase to 55.