Pensions need to be changed into ‘Lifetime Savings Accounts’ that can be utilised for people’s needs as their lives develop according to Saga director general Dr Ros Altmann.

Under today’s pension structure and with auto-enrolment policy being implemented, Altmann argued that the current level of inflexibility within the pensions landscape is not suitable for today’s workers. Money is being “locked up” and young people or older workers cannot access their savings until later in life.

Altmann agreed with the view of Association of British Insurers’ (ABI) chief Otto Thoresen who declared that overall it would be more useful for young people to be able to access their pension savings when they want, in order to pay back student debts for example. She also argued that workplace ISA’s, pensions and debt repayments accounts will “help to revitalise savings in a way that pensions alone will not.”

“Pensions are not the only savings vehicle worth having, yet government policy is currently focused almost exclusively on getting people into pension schemes. This is understandable, but not optimal. If they were saving in a ‘Lifetime Savings’ vehicle, which could be used if needed for other saving requirements, this would be far more likely to encourage them to save, as well as helping their lives.”

According to Altmann, auto-enrolment legislation should be amended so that employees can access their own contributions for their own personal needs and any employer contributions can remain invested in the pension pot. This “would lead to far lower opt-outs,” Altmann said.

Share Story: