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People 'will pay more to have greater savings flexibility'

Pensions are second-best for retirement savings because of a lack of flexibility, it has been claimed.

According to EveryInvestor, most people would be willing to pay an extra eight per cent to have an increased level of flexibility in their savings plans.

At present, confidence in pensions is hampered by payment of tax on income, access restrictions and a loss of inheritability.

"Rich people with plenty of capital can afford to give up access and flexibility on some of their money," said Mr Gilchrist.

"So it is quite rational for them to invest lump sums in pension plans. But exactly the same logic explains why most standard rate taxpayers don't put lump sums into pensions."

EveryInvestor believes that people should contribute to occupational schemes, while standard rate taxpayers should set up individual saving allowances.

But according to new research by moneysupermarket.com, two-thirds of people dip into their savings to make special or luxury purchases.

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30/11/2007 14:17:19

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