Major pension update could allow Brits to cash in retirement fund
Experts are hinting at a groundbreaking Labour pension policy that could enable Britons to dip into their retirement funds at any age.
These fresh proposals from Labour, anticipated to be disclosed next week, aim to combat retirement poverty and address the escalating costs of the state pension in the UK.
Pete Glancy from Scottish Widows and Mike Ambery of Standard Life shared insights on these innovative plans with The Telegraph. He outlined potential reforms which would permit individuals to withdraw a portion of their pension pot at any stage, well before their scheduled retirement.
According to the experts, this ’emergency savings pot’ would hold £1,000.
(Image: Getty)
Currently, UK residents can access their pensions from the age of 55, a threshold set to rise to 57 by 2028. A similar proposal was previously suggested by The Resolution Foundation during Torsten Bell’s tenure as pensions minister, reports the Express.
Mr Glancy said: “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.”
Mr Ambry said: “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.”
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The Resolution Foundation previously proposed that savers should be permitted to borrow up to 20 per cent or £15,000 from their pension funds, which would need to be reimbursed later via increased contributions.
Labour included a pledge to review pensions in its election manifesto, aiming to enhance financial security for the retired populace.
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