The Treasury has issued a call for evidence on options for early access to pension funds.
Earlier this month, Money Marketing revealed Treasury officials were preparing to look at early access before the end of the year.
Four potential models are outlined by the Treasury including a loan model, a permanent withdrawal model, early access to the 25 per cent tax-free lump sum and a feeder-fund model linking pensions to liquid savings products such as Isas.
Treasury financial secretary Mark Hoban (pictured) says: “The Government is committed to encouraging saving and wants to give individuals the maximum flexibility and responsibility to save for retirement. Early access is an idea we are keen to consider and so today we ask pension schemes, providers and individuals to offer their evidence on the possible merits of any reform in this area.”
The 15-page document seeks evidence on whether allowing savers to access their pension pot before age 55 will provide an incentive to save. The responses will help policymakers decide whether to proceed with future reforms.
The Treasury is asking for representations on the impact such a policy could have on younger people, women and low earners, all of which form the target demographic for the Government’s automatic enrolment reforms. However the Treasury says evidence in this area, which includes studies by the DWP and Scottish Widows, remains “limited and not conclusive”.
The Government is looking for evidence on whether a reform linking pension savings to repossessions would provide a net benefit to individuals, including any wider implications for the housing market and mortgage lending behaviour. Additionally, the Government says it is open to considering allowing older family members to use savings to help younger relatives in specific financial difficulties.
The Treasury is asking for views on whether the £2,000 that members of small occupational schemes can take as lump sum should be extended to personal pensions “in order to ensure equal treatment between different types of pension”.
Responses to the call for evidence must be received by February 25, 2011.