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Catch up with the latest press releases from LV=

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Early Access to Pensions Would Encourage Savings

Press release: 14/03/2011

  • LV= research shows over-50s would have saved more into their pension had they had more flexibility around accessing the fund
  • Rules surrounding early access to pension funds must be clear and simple

Following LV=’s official submission to the Treasury’s consultation on early access to pensions, John Perks, LV= retirement solutions director comments:

"We believe that allowing people early access to their pension savings would be of significant benefit, and would encourage people to put more away for retirement. In fact, our own recent research among the over-50s showed a quarter believed they would have saved more into their pension pot if access to their funds had been more flexible [1].

"No-one would disagree that we must encourage more people to take personal responsibility and start saving for retirement. For some, knowing they could have access to their retirement savings in an emergency would help. Making changes of this type that have a clear benefit to consumers in the short-term will help to start to alter people's longer term thinking and change the perception that pensions are inflexible and not worth considering until much later in life, if at all.

"Looking at the proposals in more detail, while we are behind the idea of early access to pensions, the process of doing so should not be made too complex for either consumers to understand or providers to implement. We like the idea of allowing early access to the tax free cash element of savings, or the permanent withdrawal method also proposed, and believe they could be made to work well. Tax treatment also needs to be 'neutral' so that people do not feel they are being unfairly penalised when looking to their pension to provide an 'emergency' source of funds.

"A simple way of withdrawing money from pensions also shouldn't encourage people to just deplete their savings as and when they feel like it. There needs to be a clear set of industry-wide guidelines created, stating under which circumstances people would qualify for early access, and consumers must be warned about the impact on future retirement income.

"If this can be achieved, as the LV= research showed, this could be a very positive step forward to encourage saving for retirement."

For further information about LV= please go to www.LV.com/adviser


About LV=

LV= is a registered trademark of Liverpool Victoria Friendly Society Limited (LVFS) and a trading style of the Liverpool Victoria group of companies.

LV= employs around 4,500 people, serves over four million customers and members, and manages around £8.0bn (as at 31 December 2010) on their behalf, via LV= Asset Management (LVAM). We are also the UK's largest friendly society and a leading mutual financial services provider www.lvam.co.uk

LVFS is authorised and regulated by the Financial Services Authority, register number 110035. LVFS is a member of the ABI, the AFM and ILAG. Registered address: County Gates, Bournemouth BH1 2NF www.lv.com

Notes

[1] A survey of the UK's over-50s for LV= found that:

  • 24% believe that had they been allowed access to some of their pension fund at a number of points (for instance life stages like the birth of a child), this would have encouraged them to save more into their pension.

  • 7% believe they would have saved less, and

  • 56% say it would have made no difference.

This survey was conducted by independent research agency, Opinium Research, among a sample of 1,557 UK adults aged over 50 from 2 to 7 June 2010. Results were weighted to nationally representative criteria.