The Government has decided to bar people from early access to their pensions, taking into account responses from advisers.

The Treasury says there is insufficient evidence that allowing early access would encourage people to save more.

Treasury officials said that many advisers contacted them after the call for evidence in December 2010 to explain how they already advised clients to ensure they held both Isas and pensions as tax-incentivised products.

Advisers also said there were concerns that allowing early access to pensions in cases of hardship could expose vulnerable individuals to greater financial risk in future.

Early access could leave vulnerable individuals open to pressure from lenders to meet arrears using pension funds, say some advisers.

There was support for early access to the 25 per cent tax free lump sum as this would be relatively simple to implement but it was thought this would disincentive people from contributing once the sum had been withdrawn.

Treasury Financial Secretary Mark Hoban said: “The Government is committed to encouraging saving and wants to give individuals greater flexibility in saving for retirement.”

The Government plans to work with the financial services sector over the coming months to develop savings models such as funds and workplace Isas which can be built into current pensions.

The government will also monitor whether these types of savings help young people and low earners, who typically undersave.

Fidelity said making an explicit link between Isas and retirement savings would achieve the objective without complicating the pensions landscape.

They believe the annual pension limit of £50,000 should be combined with the Isa limit of £10,680.

Mark Duke, head of settlement consulting at Towers Watson, said: “People who don’t want to lock their money away can already save in other vehicles first and benefit from tax relief.

“This option could certainly be better promoted but it doesn’t require a change in the law. We expect more employers to think about whether they want to make medium-term savings vehicles available through the workplace.”

The Government says it may revisit the question of whether to permit early access to pension savings after 2017, when the automatic enrolment of most employees into pension schemes with employer contributions has been fully phased in.