MSE News: Early pension access denied by Government 19 April 2011 at 1:20PM in Pensions, annuities & retirement planning 16 replies 3.6K views

Former_MSE_Guy

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

bendix

Quite right too. More encouraging signs of financial sound thinking by the Government.

Pinner_Ram

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_Herring

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.

michaels

Is there anything stopping a pension company offering a loan secured against a pension, payback from the 25% pension lump sum at 55?

Paul_Herring

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.)

dunstonh

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).

bendix

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.

jamesd

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.

Pinner_Ram

bendix wrote: »

Both are important.

It's just plain common sense.

I couldn't agree more.

PR

property.advert

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.