Pensions advisory group Aegon has called on the Government to allow all Britons to access their state pension early when they reach over 65. The state pension age is currently 66 and is set to rise gradually to 67 and then 68 over the coming years.
The Government published a review into the state pension age this week by Baroness Lucy Neville-Rolfe, which recommended bringing in an early access system “in certain limited circumstances”.
The document recommended this could include people aged 65 who have 45 years of National Insurance contributions or equivalent, who have performed “physically demanding” roles.
Steven Cameron, pensions director at Aegon, said an early access scheme should be introduced for all people aged 65 and over.
He said: “We believe there are major attractions in allowing individuals to choose to access their state pension from an earlier age (say up to three years early), subject to an actuarial reduction to make this fair for all and financially neutral over time.
“Indeed, we would go further and suggest this should be an option for all over 65s, rather than focussing solely on physically demanding roles, to reflect the many mental stresses as well as physical pressures on individuals’ wellbeing.”
Baroness Kate Hoey told TalkTV this week it can be “quite awful” for those who have worked all their lives, especially in very physical jobs, to suddenly discover their state pension age has increased.
She said: “I think for a lot of people who have worked very, very hard, particularly in manual jobs, that are probably in many ways not as healthy as some of our jobs have been, I think it is quite awful to suddenly discover that you’re in that line, where you’re going to be the group that’s going to have to work on to get your state pension, which you’ve paid for right throughout your life.”
The state pension age is currently set to increase from 66 to 67 between 2026 and 2028, and then from 67 to 68 between 2044 and 2046.
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Some analysts were predicting the review could bring forward the transition from 67 to 68 but ministers chose to stick to the current timetable for now.
Mr Cameron said: “While the Government has chosen not to accelerate the planned increase in state pension age to 68, Baroness Neville-Rolfe’s report clearly shows that future increases are highly likely.
“With every increase, the benefits of offering flexibility increase, as widely varying health and employment situations make a compulsion to wait longer for state pensions increasingly divisive, disproportionately affecting the less wealthy.
“The Government’s review will need to consider those who are heavily reliant on the state pension and if an actuarially reduced weekly amount could take them below the means-tested benefit threshold.
“But with millions increasingly benefitting from automatic enrolment, most employees will have a meaningful private pension, reducing the number facing this risk.”
State pension payments are increasing with the start of the new tax year on April 6 by 10.1 percent.
The full basic state pension is increasing from £141.85 a week to £156.20 a week while the full new state pension is going up from £185.15 a week to £203.85 a week.
State pensioners on low incomes may be able to boost their income by claiming Pension Credit, which tops up a person or couple’s income.
Payments for the benefit are also increasing by 10.1 percent in the new financial year, with the top up for singles going up to £201.05 a week, while the rate for couples will increase to £306.85.
A claimant may also be able to get extra payments depending on a person’s situation, such as if they care for another adult.
Pension Credit is a ‘gateway benefit’, providing access to other means of Government support, such as a free TV licence for claimants aged 75 and over.
People on the benefit can also get a £900 cost of living payment, going out in three instalments, with the first £301 instalment to arrive in people’s bank accounts between April 25, 2023, and May 17, 2023.
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