Britons could be allowed to access their pension savings at any age under a radical new plan from the Labour Government, which is set to be announced by ministers next week, according to analysts
Labour is preparing to unveil a major shake-up to the pension system as part of a slew of policy changes aimed at tackling retirement poverty and the soaring cost of the state pension.
As part of the rumoured reforms, workers could able be able to dip into their retirement savings if they run into any financial trouble, The Telegraph reports. If implemented, this policy will allow pension savers to access £1,000 many years before reaching retirement.
Currently, Britons are only be able to access their pension cash from the age of 55, a threshold which is set to jump to 58 in 2028. It should be noted that rules are different if someone is terminally ill or had worked in one of a few limited set of professional roles, such as full-time athlete.
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|Workers will be allowed to access their pension savings at any age under rumoured Government plans
Pete Glancy, the head of pensions at Scottish Widows, and Mike Ambery, the retirement and savings director at Standard Life, shared that the plans may include the launch of emergency savings pots within pensions that people could access before finally retiring.
Glancy told The Telegraph: "We expect the second half of the pensions review to shortly be announced by the Government, and I think there’ll be a discussion on ‘Should we be helping people build up a rainy day savings pot alongside the retirement pot?’
"You’d be able to access the savings at any point. The idea is that if the pot gets above £1,000 because you haven’t needed to access it, it’ll tip over into the pension.
"We are supportive of that idea as it will keep many people out of the hands of unscrupulous lenders, and if the money isn’t ever needed for a rainy day, then it means a slightly bigger pension pot at retirement.”
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GETTY | Pension ministers are expected to announce radical reforms to the pension system
Ambery noted that early access to retirement savings could be a policy announced by the Labour Government next week and is likely to welcomed by the wider pension industry.
He added: "The critical item will be the scope of the pensions review and its remit. Given the amount of time and change since the last commission-based review, it would be logical to recognise that the scope of pension and savings in today’s and tomorrow’s world might be wider.
"As a result, the review could include accessing pensions early through emergency savings."
A variation of this policy was floated by current Pensions Minister Torsten Bell, who suggested the reforms during his tenure at the Resolution Foundation.
When contacted by GB News, the Department for Work and Pensions (DWP) asserted it would not comment on any speculation regarding Government policy. Earlier this week, Chancellor Rachel Reeves signaled the Government's Pensions Bill will be signed into law in the next couple of months.
She shared: "The creation of defined contribution (DC) and Local Government Pension Scheme megafunds…will mean larger and more powerful pots of funding invested productively across the country.
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PA | Pensions Minister Torsten Bell has previously been in favour of the policy
"Pension funds, and this Government, are united in our determination to deliver higher returns for savers and more investment in the economy.
"That is why, since last year, funds covering the majority of the DC market have committed to the Mansion House Accord…pledging to invest at least 10 per cent of their main funds into private assets such as infrastructure and growth markets…with at least half of that going into UK projects."
However, pension industry insiders lamented the lack of commitment to an adequacy review from the Chancellor during her Mansion House address.
Helen Forrest Hall, the Pensions Management Institute's (PMI) chief strategy officer, said: "Retirement adequacy cannot be solved in isolation. We must break down product silos and build a lifetime savings framework that reflects how people actually live—balancing pensions, ISAs, housing and emergency savings."