The UK’s leading pensions body said the extra flexibility of early access would only encourage a minority to save more into a pension, while a seemingly small withdrawal could cause a heavy fall in the final value of a pension. Such losses would leave even more people dependent on a low and complicated state pension system that is in urgent need of reform, the NAPF said in its response to a Government call for thoughts on early access.
Joanne Segars, NAPF Chief Executive, said: “The UK is facing a crisis in saving for its retirement, and far too many working people are going to rely on one of the lowest state pensions in Europe. So ideas that make workplace pensions more flexible and attractive must be explored. But offering early access to a pension is a distraction, not a solution. People will be tempted to dip into their pensions as a quick fix and instead end up with a serious, long-term problem years down the line.¨
The NAPF also said that if early access were allowed for hardship reasons, such as to cover a job loss, then pension providers and trustees would face the difficult task of investigating and judging individual cases. The NAPF believes a better route would be to make mortgage protection and health insurance more accessible.
Press release
© NAPF - National Association of Pension Funds
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