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TFC at any time could boost pension saving

Scottish Life head of pensions strategy Steve Bee is calling for pension savers to have access to tax free-cash at any age to increase interest in pensions.

At the Money Marketing Retirement Planning Summit in Monte Carlo this week, Bee said one way of getting people to re-engage with pension saving would be to allow them to have access to their fund before retirement.

He said: “If you make pension products more highly valued by allowing people to use tax-free cash, it might interest more people in saving.”

The minimum age which you can take tax-free cash is set to increase next year from 50 to 55. Bee said that only around 15 per cent of TFC is ever used for retirement income, so people should be allowed to access this money at any age.

He said that under the current system, a 55-year-old can take TFC to do up their conservatory but someone who is 45 is not allowed to access these funds to stop their home being repossessed.

At the conference, Shadow Pensions Minister Nigel Waterson said the Conservatives are already looking into the idea.

Waterson said: “We are looking at the US pension system which allows early access to pension funds so that people can draw down funds for lifetime events like university fees and home purchase. There is considerable evidence that such flexibility encourages pension saving, even if individuals do not actually take advantage of the possibility.”

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  1. Unusual to disagree
    with Steve Bee, but in my opinion an age restriction of 50 or 55 before one can access the Pension Commencement Lump Sum (currently tax free) is a good thing. It protects the irrisponsible 30 or 40 year old from their retirning self, at least meaning the can’t squander it on idle things like the conservatory mentioned. Whilst I can see the argument for allowing someone to use it to stop their home being reposessed, accessing benefits earlier opens ALL monies to your creditors 50/55 is one thing, but opening the box to your creditors before that would do the retiree little or no favours.

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