UK - Plans to allow early access to pension savings have been buried after a consultation revealed "insufficient evidence" it would encourage more saving, the Treasury says.
The proposals - revealed by the government in December - would have given people the chance to dip into their pension pots before age 55 in a bid to boost saving or assist individuals facing financial hardship.
However, the Treasury said there was no evidence the plans would achieve these objectives and would not now proceed with the idea.
It said it would instead focus on developing innovative workplace savings models such as feeder funds and explore reform to trivial commutation rules to improve flexibility.
Treasury financial secretary Mark Hoban (pictured) said: "While early access has some merits, there is insufficient evidence to suggest it would act as an incentive to save more into pensions.
"We will work with industry to develop workplace saving to supplement pension savings. In addition, we will explore other ways of making pension tax rules simpler and more flexible, for example by making it easier to deal with small pension pots."
The announcement follows a muted industry reaction after the ‘negative' tone of the consultation.
A summary of consultation responses published by the Treasury today said many held the view that pensions should remain unambiguously for retirement.
Concerns were also expressed over the potential negative impact of early access withdrawals on pension pot sizes at retirement.
Hargreaves Lansdown pensions analyst Laith Khalaf said: "There was never a clear case for allowing early access to pension saving.
"It appears appealing on first glance but there are big risks attached to it. One is complicating the pension system. The second is people doing damage to their retirement income - two very big risks."
The government will now proceed to work on alternative retirement saving models to traditional pensions.
It said: "The government welcomes industry and employer innovation in widening savings choices open to employees, such as through workplace ISAs, integrated pension and ISA platforms, and feeder fund arrangements.
"The government will engage with the industry over the coming months to explore how the development of innovative saving models such as feeder funds could be further facilitated within the existing pensions tax framework."
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