The government has no plans to remove taxes on accessing pension savings early in order to aid those struggling financially in the coronavirus crisis.

Economic Secretary, John Glen, said charges on early withdrawals, which can be from 40 per cent to 55 per cent, were needed to allow the government to recoup on its investment in pensions tax relief and to encourage people to save for retirement.

He commented: “The government wishes to encourage pension saving, to help ensure that people have an income, or funds on which they can draw, throughout retirement.

"This makes pensions tax relief one of the most expensive reliefs in the personal tax system. In 2017/18 income tax and employer National Insurance contributions relief cost £54bn.”

However, Glen added that “as with all tax policy”, charges on early withdrawals would be “kept under review”.

Glen was responding to Scottish National Party MP and consumer affairs spokesperson, Patricia Gibson, who had asked whether the Chancellor had “plans to enable people facing financial difficulties during the Covid-19 outbreak to draw down more than one quarter of their pension early without incurring 40 per cent tax.”

The news that the government will be sticking with early access charges may come as a blow to some, with AJ Bell research from May showing that around 16 per cent of savers under 55 would consider offers of early pension access amidst coronavirus, with that number rising to 21 per cent among young savers.

This is perhaps unsurprising as, according to figures from The Office for National Statistics, the number of employees on payroll dropped by more than 600,000 between March and May, while 2.8 million people were claiming work-related benefits, an increase of 126 per cent.

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