Could cash from a pension be a better alternative, in an emergency, than a payday loan? Pensions and investment company Hargreaves Lansdown have suggested that savers should be allowed to access their retirement fund, rather than turning to the expensive interest rates involved with payday lenders.
The Guardian explains more –
“…offering households a cash reserve of a few hundred pounds to draw on in an emergency would mean that they wouldn’t have to rely on short-term borrowing to fund these unexpected expenses. With millions of workers now being enrolled automatically into pensions by their employers, the firm said there was potential to allow them to build a cash reserve over as little as two years, which could be drawn on if necessary. The impact on their retirement provision would be minimal and, depending on how the scheme was structured, could reduce the eventual pension payout by as little as 2%. To stop the money being frittered away, the firm suggests that savers would have to consult with the Money Advice Service or The Pensions Advice Service before being allowed to withdraw cash, and only be allowed to withdraw more money after several years of paying into their retirement fund.”