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MSE News: Early pension access denied by Government

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MSE News: Early pension access denied by Government

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MSE_GuyMSE_Guy MSE Staff
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I've been Money Tipped! Newshound! Chutzpah Haggler
This is the discussion thread for the following MSE News Story:
"Treasury Minister Mark Hoban says early access would not encourage people to save nor would it help those in hardship ..."

Read the full story:
Early pension access denied by Government


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Replies

  • bendixbendix Forumite
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    Quite right too. More encouraging signs of financial sound thinking by the Government.
  • This is, IMO, a very sensible decision.

    The up-front tax relief is your incentive to save for your retirement, knowing that you cannot access the money for many years.

    If you want to save, but think you may need to access your savings, then an ISA is for you.

    Myself, I invest broadly 50:50 between the two for flexibility.

    Being able to easily access retirement savings could be a cop-out and would only push retirement further away, or cause you to be poorer when you get there. Make sure you are not in the position of needing to access savings anyway, build up your cash reserve now.

    Other thoughts?

    PR
  • Paul_HerringPaul_Herring Forumite
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    tfa wrote:
    The decision comes after a two-month consultation period
    Erm - what consultation period?
    during which the Government received over 100 responses.
    Hmm. Wonder why there was only 100.
  • michaelsmichaels Forumite
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    Is there anything stopping a pension company offering a loan secured against a pension, payback from the 25% pension lump sum at 55?
    I think....
  • Paul_HerringPaul_Herring Forumite
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    michaels wrote: »
    Is there anything stopping a pension company offering a loan secured against a pension, payback from the 25% pension lump sum at 55?

    The cost (to the client)?

    (More.)
  • dunstonhdunstonh Forumite
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    michaels wrote: »
    Is there anything stopping a pension company offering a loan secured against a pension, payback from the 25% pension lump sum at 55?

    No. You can borrow up to 50% of your pension if you want. However, there are rules in place that mean that it is only used by a minority of people where it is suitable or scam companies conning people into thinking they are getting money from their pension without realising they run the risk of HMRC penalties and a fund being eroded to virtually nothing due to unregulated firms charging bucket loads.

    You can borrow externally using any old loan and tell the lender you intend to use your pension lump sum to repay it. However, they cannot put a charge against the pension and would be reliant on the individual doing what they say (just as pension mortgages did).
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • bendixbendix Forumite
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    Pinner_Ram wrote: »
    Myself, I invest broadly 50:50 between the two for flexibility.


    PR


    I never understand the debate about ISAs (or other liquid savings) versus pensions for retirement planning. To me it's not an either / or. Both are important.

    It's just plain common sense.
  • jamesdjamesd Forumite
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    Hardly a surprise after the government cut the income you can take from a pension in drawdown in the last batch of changes.
    dunstonh wrote: »
    just as pension mortgages did
    And still do to some extent. I have one with the pension lump sum as the primary repayment vehicle.
  • bendix wrote: »

    Both are important.

    It's just plain common sense.


    I couldn't agree more.

    PR
  • bendix wrote: »
    I never understand the debate about ISAs (or other liquid savings) versus pensions for retirement planning. To me it's not an either / or. Both are important.

    It's just plain common sense.

    True but if the average salary is £25k (is it really ?) then they simply don't have enough to even fill an ISA, nevermind posting large sums to their pension account. For these people, the vast majority it would seem, it really is an either / or scenario.

    In fact, most people cannot afford either and that is why they rob their ISAs well before retirement. If they could, they'd empty their pension account as well. The fact that they cannot is a disincentive for them to save anything.
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