View more on these topics

Mercer warns about early access “leakage” for pensions

Mercer has warned against Government proposals to look into early access to pension savings claiming this “leakage” undermines efforts to encourage people to save for retirement.

The firm conducted research across 11 major national pension systems in its Melbourne Global Pensions Index and found that early access hindered efforts to provide sustainable and adequate pension provision in Canada, Chile, China, Netherlands and the United States.

The coalition states that it will “explore the potential to give people greater flexibility in accessing part of their personal pension fund early”, in its agreement.

But global retirement strategist Bruce Rigby says: “Allowing members’ early access to their accumulated savings can have an appealing short term impact and satisfy a range of needs but there is a sting in the tail.

“In countries where such leakage occurs, these payments are rarely paid back in full. This can lead to a lack of sufficient funds in retirement and a greater call on government funds. The problem arises because most people underestimate how much they will need for their retirement or how long they will live.

“Those capitalising on early access risk being unable to purchase adequate retirement incomes, or running out of money in old age if they do not annuitise.

“Financial responsibility to care for these people then falls back onto the state and taxpayers. Early access often means the fundamental goal of ensuring financial self-sufficiency in old age becomes much more difficult.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com