Sofat backs early withdrawal of pension savings

The director of London-based Addidi Wealth said she welcomed comments by Otto Thoresen, director general of the Association of British Insurers, on the need to allow pension savings to be used as a lifetime savings account which can be drawn on to pay off student debt.

She said: “Locking away money for decades in a pension plan is not attractive to today’s young people because they have so many other financial commitments, such as paying off university fees or saving for a property, so they are not joining pension schemes.

“If they knew they could access their pension pot for other commitments, we might be able to revitalise interest in pensions.”

Ms Sofat added that in the run-up to the implementation of auto-enrolment, it was essential that pensions were made more attractive to the lower paid, older people and the young. Otherwise large swathes of the workforce would opt out and fail to benefit from the employer’s contribution, which will eventually be 3 per cent of their salary.

She said: “While I recognise that not being allowed to access your pension savings until retirement can be a good discipline, times have changed. Nowadays, people can expect to have much longer working lives and will want more flexibility.”