Lib Dems propose early access to pension lump sum

Mr

Whilst in principal this seems a sensible and positive solution which would undoubtedly be welcomed by many, I suspect there is a strong possibility the FSA would be all over advisers with all kinds of threats about the suitability of advice. I understand there will still be advisers out there who will see an opportunity to take advantage for the wrong reasons however they will be caught and ultimately punished. This type of behaviour is unfortunately an issue in all industries but in the main, most (but not all)independent advisers are caring and honourable people who are focused on helping their clients achieve their objectives and would only recommend this course of action once all others had been considered. Wealth warnings obviously need to be issued but at the end of the day surely it's better to raid your investments to sort out a financial predicament that many people find themselves in through no fault of their own. Whether its pensions, isa's or anything else is pretty irrelevant if you or your children are going to be made homeless, bankrupt or both. This is a great opportunity for the politicians to think about the general public and for the FSA to be sensible. After all, the gobal economy has collapsed whilst all the regulations were in place and the regulators were ranting on about one plan charging 0.5% or so more per annum than another. Meanwhile the big problem which was building up was being ignored, either through incompetence or ignorance which has done more to harm all pensions and investments than the cost of one plan being more than another. A terrific opportunity has been identified and let's hope the powers that be can see the true benefits for all and not only the possible downside which I agree is also present and should not be ignored.

Posted by: John Beattie

The proposal suggests an absence of logical thought.

If this report is correct, then it would appear that it never occurred to Steve Webb that: a) First time buyers are predominantly young, and few have even started to save for a pension. If they’re unable even to save up for a deposit, how would they have managed to save a substantial sum in a personal pension plan? b) Those defaulting on mortgage payments are, by definition, financially overstretched. Although generally not as young a group as FTB’s, few would be either old enough &/or sufficiently financially secure to have built up substantial sums in a personal pension plan. Inaccessibility is certainly a deterrent to saving via a pension, but there are much bigger deterrents: a) For the majority of people of relatively modest means, saving via a pension plan is wholly inappropriate, since much of those savings will end up being consumed to pay for the means-tested element of the state pension that the pensioner would have received had she/he not saved at all. b) The risks of placing precious savings in a pension plan are simply too great. Precisely because savings inside a pension plan cannot be taken out, they are hostage to any additional taxes that the government may choose to impose. Far better to save via an ISA - savings may be removed any time, especially if the tax environment changes.

Posted by: Jan Luthman

IFA

The first thing that strikes me from this is that, at last we have politicians talking about pensions. However, they're not addressing the problem of people not having enough money in retirement. How is this proposal going to help? For people to be able to spend their pension before retirement is hardly going to improve the fact that the average amount taken from pension funds last year was £28,000! How many people are we actually talking about who have large pension funds? If what we're talking about here is people accessing money purchase funds, who is going to administer that? If we're suggesting that the only reason you can take money early from your pension is to clear debts, who will police that, and how? By the sheer nature of the fact that people don't save enough for pensions, it doesn't take a genius to work out that they're notorious for not doing what they're told to. How do you stop them taking on more debt once their pensions have bailed them out? The problem here is education. I suppose the only way we will get politicians warning people of the risks of poverty in retirement, is when some of them face the real prospect of that themselves. Or have I really missed the point? Am I being too cynical in suggesting that should this option be available to everyone, then this is a way of politicians accessing publicly funded pensions, without having to claim expenses!!

Posted by: Dermot Brannigan

Mr

This is a great idea, and why not?. The powers that be seem to have a problem with people exercising their right to their pension benefits earlier than intended.It's an individuals right, and we are here to help them. I credit the public with more sense than the regulators, everyone I know understands that if they have something now, their pensions, they can't have it a second time. Its not rocket science. But the hurdles you have to leap and hoops you have to jump through to justify this is rediculous. Accessing tax free cash early has changed the lives of many people I know, all for the better. One client almost had the bailiffs at the door, another had so much debt they were in a really bad way. At the age of 51 I took my own pension last year, absolutely no regrets, I would have had a lot less now if I'd left it. And if a client is dissuaded from taking any pension benefits early, will anyone guarentee to them that they will be better off at normal retirement, I doubt it, so would there be a case to answer perhaps?. Many people are straight forward, hardworking ordinary folk with a good deal of common sense and would simply be grateful of an opportunity to help themselves with their difficult financial situations without any comeback to the industry. I support the proposl.

Posted by: Mark Priestley

Mr

Is no the time to raid pension funds - how much did they reduce last year? No - woolly and not thought through idea in my opinion.

Posted by: Peter Maxwell-Lyte