Early access to pension benefits

Apparently the Government are considering radical proposals to allow access to pension funds if the pension fund owner is in urgent need of cash due to dire financial need.

Perhaps not so radical because I understand that in the USA consumers are allowed to access their 401k plans (the equivalent in the UK to occupational defined contribution plans).

We can see both advantages and disadvantages to early access to pension monies.

The biggest single disadvantage would be where consumers effectively mortgage their futures to pay for immediate needs.

Let’s hope that if early access is introduced the rules are robust enough to prevent “frivolous” use of such monies.

On a connected but separate note I sense already a rush by the current Government to make significant changes to pension provision in the UK.

We must all hope that they apply more joined up thinking than the last administration who pretty much destroyed the best private pension provision of any Western European country.