The Government has announced it will not consider early access to pension savings, having considered responses to a call for evidence on the issue.

In a statement announcing its response to the consultation, the Government said there is "limited" evidence that allowing early access would have a positive effect on overall pension contribution levels, or provide significant help to individuals facing financial hardship.

Further, the Government intends to focus on implementing the “extensive” private pension reforms already planned, including the introduction of automatic enrolment, before considering further reform.

However, responses to the call for evidence showed support for the feeder fund model, which could create a more flexible savings product linking liquid savings products - such as ISAs - and pension savings together into a single account.

As a result, the Government said it will engage with industry to further develop innovative workplace savings models that will encourage saving for both medium term needs and for additional retirement income.

Financial secretary to the Treasury Mark Hoban said the Government is committed to encouraging saving and wants to give individuals greater flexibility in saving for retirement.

“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 Government will announce further details on the reform to trivial commutation rules for small personal pension pots in the autumn.

Today head of pensions at AXA Wealth Mike Morrison said AXA’s recent research found that only a third of consumers wanted to access their pension pot early, with a third saying it would encourage them to increase their current retirement savings.

“Consequently, HM Treasury’s decision appears to be in line with consumer sentiment.

“However, there is still an overwhelming need for the industry to educate consumers more and ensure they have a range of savings vehicles in their portfolios that allow them to save for the long term but also have access to money for emergency situations.”

Access Treasury’s summary of responses to the call for evidence here. (pdf)

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