MSE News: Early pension access denied by Government

bendix

property.advert wrote: »

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.

Can't those people just be cleverer or better looking or smarter or something, get better jobs?

Honestly, do I have to come up with ALL the answers around here?

jos004

MSE_Guy wrote: »

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

Of course what this numbskull government failed to consider, is early access for those that might be in debt. After all, is it not best to pay off the debt, quickly? If let's say a person owes 5,000 pounds; what's wrong with them accessing, say 3,000 pounds, of their pension?. The pension company can pay the creditor directly; thereby stopping the individual, spending the money, on a flash car/exotic holiday.

My, this country some times.

Paul_Herring

jos004 wrote: »

Of course what this numbskull government failed to consider, is early access for those that might be in debt.

I'm sure they have.

After all, is it not best to pay off the debt, quickly?

Or not be in debt to begin with? 'Easy access' could encourage those with a propensity to be in debt to make the debt larger with the thought of "it's OK, my pension will pay for it" while effectively removing any provision they had for their retirement.

And do you think the credit companies would prevent people running up such bills once they know that not only can they go after people's houses, they could also go after their pension funds?

If let's say a person owes 5,000 pounds; what's wrong with them accessing, say 3,000 pounds, of their pension?.

Where does it stop though? £5K? £50K? £500K??

The pension company can pay the creditor directly; thereby stopping the individual, spending the money, on a flash car/exotic holiday.

Presuming the debt wasn't incurred on acquiring a flash car/exotic holiday to begin with...

dtsazza

Paul_Herring wrote: »

After all, is it not best to pay off the debt, quickly?

Or not be in debt to begin with? 'Easy access' could encourage those with a propensity to be in debt to make the debt larger with the thought of "it's OK, my pension will pay for it" while effectively removing any provision they had for their retirement.

I completely agree, and I'm glad that these proposals have been turned down.

The ability to access pension funds pre-retirement would (IMHO) almost certainly be used by the majority of the population to go on a holiday, or buy a new car, or build an extension, or whatever causes the average family to run up unsecured debts.

The entire point of the pension is that it's intended as a provision for retirement - giving someone access to it now means they'll have less money for retirement (in all but the most unlikely of scenarios), which with pensions underfunded as it is, is not something that it's good to promote.

If people are disinclined to contribute to a pension because of this rule, then I don't think they're serious about saving for their retirement (as opposed to merely "putting some money aside"). In that respect it's good that these restrictions might act as a slap round the face; a reminder that they really do need to consider what income they want in retirement (and for how many years), thus how large their pot needs to be, thus how much they need to start contributing today.

As always it comes down to education; but those who understand the importance of pensions won't want to raid them anyway (they'll have funds accessible in other savings vehicles), and those who don't shouldn't be trusted to.

RichandJ

dtsazza wrote: »

I completely agree, and I'm glad that these proposals have been turned down.

The ability to access pension funds pre-retirement would (IMHO) almost certainly be used by the majority of the population to go on a holiday, or buy a new car, or build an extension, or whatever causes the average family to run up unsecured debts.

The entire point of the pension is that it's intended as a provision for retirement - giving someone access to it now means they'll have less money for retirement (in all but the most unlikely of scenarios), which with pensions underfunded as it is, is not something that it's good to promote.

If people are disinclined to contribute to a pension because of this rule, then I don't think they're serious about saving for their retirement (as opposed to merely "putting some money aside"). In that respect it's good that these restrictions might act as a slap round the face; a reminder that they really do need to consider what income they want in retirement (and for how many years), thus how large their pot needs to be, thus how much they need to start contributing today.

As always it comes down to education; but those who understand the importance of pensions won't want to raid them anyway (they'll have funds accessible in other savings vehicles), and those who don't shouldn't be trusted to.

+1

I think if they had allowed this idiocy I would have been looking for other employment. Can you imagine the dog's breakfast the civil servants would make of the rules for accessing funds, the records that would have to kept plus the Easter Egg (there's always one) in the legislation somewhere which would have to be put right by subsequent supplementary easements ?

Loughton_Monkey

I would be 'comfortable' with a hybrid system. This would be, in effect, an ISA with, say, £50K per annum contribution limit - with tax relief.

But there would be 2 conditions:

1. All withdrawals would be subject to claw-back of tax at the highest rate given.

2. Under no circumstances, never, utterly solidly never, never, never, over the complete government's dead body, would anyone get more than state pension from the government. In other words, you are free not to save for retirement, but this means you have signed in blood that you agree you will never, ever, get benefits after state retirement age.