Let people take state pension early or they'll risk missing it, says thinktank

People who have worked and paid national insurance (NI) for at least 45 years should be allowed to take their state pension early or risk missing it out on it entirely, the Pensions Policy Institute has argued.

In a research paper published on Wednesday, the thinktank claims such a move would enable up to 250,000 people to enjoy a much-needed retirement after decades of physically demanding, manual work – a retirement that many will be denied because they will die before they’re old enough to retire.

Increases in average life expectancy have led successive governments to raise the state pension age to 67 by 2028 – for men and women.

The paper, sponsored by Age UK, noted that, while most people will live to 67 and beyond, there are others – particularly men from deprived areas – who will be unfairly penalised by the change.

In Glasgow, the latest figures show that healthy life expectancy at birth – an estimate of how many years people might live in full health – is 55.9 years for men and 58.5 years for women – nearly 10 years below the current state pension age.

Those in manual work or with caring responsibilities who are most likely to be hard hit by state pension age increases, says the report.

Age UK is urging the government to fully consider the effect of extending working lives and has offered potential policies, which could mitigate the effects.

• It has proposed allowing people with more than 45 years of NI contributions to receive their state pension early unreduced. These people are more likely to be in manual occupations, having started working straight after school. This option is already happening in Germany, it says.
  
  
• Another option would be to allow early access to reduced state pension to allow for the fact that the pension will be paid for a longer time. This could provide a source of income for people who are happy to accept a lower state pension in return for an earlier retirement. Many countries, including the USA and Canada, already allow this.
  
  
• The paper has also proposed allowing early pension access to those with disabilities and/or caring responsibilities, or de-linking of Pension Credit (PC) and the state pension age that would allow the age at which people receive PC could remain at 65.
  

Caroline Abrahams, Age UK’s charity director, said increasing the state pension age based on average life expectancy will cause hardship for many people.

“It is reasonable to consider raising the state pension age as overall life expectancy goes up – but, as a blanket approach, it risks leaving many people facing serious problems in later life through no fault of their own. In fact, as the state pension age climbs ever higher, many of those with lower life expectancies – who are also likely to be on lower incomes – may end up with little or no time left in retirement to enjoy.”

John Adams, the PPI’s senior policy analyst and author of the briefing paper, said: “With increasing life expectancies in the UK, it is understandable that the government might wish to increase state pension age, but care should be taken to recognise the impact on people who may be unable to continue in work, for example, as a result of health issues or caring responsibilities.”

Age UK offers a free advice service for older people who are affected by any of these issues on 0800 169 6565, or contact their local Age UK for further information.