MetLife has called on the Treasury to launch a Isa-style pension account which allows savers early access to their pension pot.
The provider says the launch of a “mini-pension” to supplement automatic enrolment would improve incentives to save. Savers could contribute up to £5,000 a year into the scheme, with tax relief at 40 per cent, and access up to 25 per cent of their fund every five years.
MetLife product marketing director Peter Carter says the plan could be funded by cutting the current annual allowance of £50,000 and limiting tax-relief for top-rate taxpayers to 40 per cent. He says: “Our proposal complements the Government’s drive to improve savings and financial planning. Allowing limited access to savings will enable people to get into the habit of saving for retirement.”
Wingate Financial Planning director Alistair Cunningham says: “Any concept that is designed to increase saving among people on low to middle incomes is encouraging. But the reality is that those on low incomes who are living hand to mouth just cannot save, no matter how good a deal you put in front of them.”