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kevin
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Open date: 13 December 2010

Closing date: 25 February 2011

In the Coalition Agreement the Government pledged to explore the potential to give people greater flexibility in accessing part of their private pension fund early.  This call for evidence document on early access to pension savings reflects the Government commitment to considering ways to boost individual saving, and foster a culture of personal responsibility over financial choices, particularly in encouraging saving for retirement.

The document sets out the available evidence on early access and whether it could provide an effective incentive for individuals to save more into a pension.  It also sets out some of the different models for how early access could potentially be offered, the potential benefits and risks of each, and seeks further evidence from interested parties.

The Government also asks for representations on two other areas concerning pensions tax rules as part of this call for evidence: on the trivial commutation rules that determine when individuals with small pension funds can take their savings as a lump sum, and evidence on the barriers to transferring smaller pension pots.

The Government is keen to consider the arguments for and against allowing more flexible access to pension savings, based on firm evidence, before considering any further change to the pensions tax framework.

Contribute your views

The Government invites anyone with an interest, particularly the pensions industry, pension research bodies, and consumer groups to share any evidence, research and analysis on whether early access to pension savings would be a positive reform, and if so how it may be offered most effectively. 

The call for evidence document sets out a series of specific questions on which we welcome submissions, and is available below in Adobe Acrobat Portable Document Format (PDF).  If you do not have Adobe Acrobat installed on your computer you can download the software free of charge from the Adobe website<. For alternative ways to read PDF documents and further information on website accessibility visit the HM Treasury accessibility page<.

Responses or queries on this call for evidence can be submitted by e-mail to: earlyaccess@hmtreasury.gsi.gov.uk<

Alternatively, submissions can be sent to: Early access to pension savings, Pensions & Pensioners Team, Room 2/S1, HM Treasury, 1 Horse Guards Road, London, SW1A 2HQ.

For enquires by telephone, please contact Adam Wreglesworth on 020 7270 5043.

http://www.hm-treasury.gov.uk/consult_early_access_pension_savings.htm<

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kevin
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Government publishes response to its call for evidence on early access to pension savings

Government publishes response to its call for evidence on early access to pension savings

19 April 2011 11:38 <

HM Treasury   (National)

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Mark Hoban, Financial Secretary to the Treasury, today published the Government’s response to the call for evidence on early access to pension savings.

The Government is committed to improving flexibility over savings, to encourage individuals to either start saving or save more. Following consideration of the responses received, the Government has concluded that early access to pension savings should not be considered at the present time on the basis that:

• there is limited evidence that allowing early access would have a positive effect on overall pension contribution levels or provide significant help to individuals facing financial hardship; and

•the extensive private pension reforms already planned, most notably the introduction of automatic enrolment from 2012, should be implemented before the Government considers further reform.

However, responses to the call for evidence showed support for the feeder fund model and the Government will engage with industry to further develop innovative workplace savings models that will encourage saving for both medium term needs and for additional retirement income. In addition, the Government will explore reform to trivial commutation rules to improve flexibility for those with very small levels of savings in personal pension schemes. This will benefit both individuals and pension providers.

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The Financial Secretary said:

“The Government is committed to encouraging saving and wants to give individuals greater flexibility in saving for retirement. While early access has some merits, there is insufficient evidence to suggest it would act as an incentive to save more into pensions. We will work with industry to develop workplace saving to supplement pension savings. In addition, we will explore other ways of making pension tax rules simpler and more flexible, for example by making it easier to deal with small pension pots.”
The Government will announce further details on the reform to trivial commutation rules for small personal pension pots in the autumn.

1. Over 100 responses were received, including from over 60 organisations representing major pension providers and schemes, consumer bodies, think tanks and other financial service providers.

2. The summary of responses to the call for evidence on early access to pension savings is available at: http://www.hm-treasury.gov.uk/consult_early_access_pension_savings.htm<

3. Currently, individuals can only access savings in a registered pension scheme from age 55 at the earliest (except in cases of serious ill-health or other limited circumstances.)

4. The response period opened on 13 December 2010 and closed on the 25 February 2011.

5. The Department for Work and Pensions estimate that around 7 million working age people are currently under-saving for retirement.

6. The current small pot trivial commutation rule allows pension funds of less than £2,000 in an occupational pension scheme to be paid out as a lump sum (subject to further conditions).

7. Feeder funds are products that link an ISA to a pension, for example by having a threshold above which liquid savings are automatically rolled over into the pension part of a product.

http://nds.coi.gov.uk/content/detail.aspx?NewsAreaId=2&ReleaseID=419245&...<

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