Government urged to abandon early access pension scheme in favour of ISAs

Fidelity International has urged the government to reconsider proposals on early access to pension funds.

The organisation believes that making an explicit link between ISAs, which offers tax-free savings interest rates, and retirement savings would achieve its objective without further clouding the pension issue.

Fidelity has suggested linking the £50,000 annual pension limit and the £10,200 ISA limit into a single £60,000 annual tax-advantaged savings limit.

Under Fidelity's proposals up to £30,000 a year could be placed in the ISA part of the savings scheme and the remainder of the £60,000 into the pension pot.

Gary Shaughnessy, UK managing director at Fidelity International, said: "The proposed system would make it clear that a considerable sum could be saved flexibly and people would have the choice of when to lock it into their retirement savings, and gain the benefit of an uplift through tax relief."

The Fair Investment Company recently revealed less than ten per cent of Brits are taking advantage of the savings rates offered by tax-free stocks and shares ISAs.
 

Moneyextra.com recommends you take independent financial advice before acting on any article

Back

2011-03-01 11:15:04 © Moneyextra.com