Early access could increase pensions savings

Research from Legal & General shows that the inclusion of some features of The USA & New Zealand pension systems could increase pensions savings in The UK.

Many UK residents are reluctant to commit their money into a pension scheme because they cannot access it before they reach at least age 55, and often later if they want to access their pension without penalty. Some pension schemes in the USA and New Zealand allow access to pension funds before age 55 in specified circumstances. Legal & General commissioned research to see if the inclusion of this facility might change UK consumers' attitudes. The research was carried out by a BRMB Telephone Omnibus Survey and is part of Legal & General's joint sponsorship with B&CE Benefit Schemes of the Pension Policy Institute's research project on Early Access to Pension Savings, which is released today.

When consumers were asked if the possibility of early access to their funds in limited circumstances would encourage them to increase their contributions, 42% of existing pension scheme members in the survey said they were likely or very likely to do so. When those not already in a pension scheme were asked if such a facility would encourage them to join a scheme, 42% of those in the survey said they were likely or very likely to do so.

Legal & General's Wealth Policy Director, Adrian Boulding says "The Government's forthcoming pension reforms will need high levels of worker participation to succeed. Our research shows that allowing controlled early access to pension fund money would be popular and increase both the breadth and depth of pensions coverage in the UK. We need bold initiatives like this to re-start pensions savings habits after the credit crunch."