A new report has suggested that women hit by the rising state pension age could access their pension earlier, but in return for a lower amount.
Early access to the state pension
The Commons Work and Pensions Committee report has invited the government to consider offering women who were given short notice of the increase in the state pension age the option to retire earlier, if they accept a slightly reduced pension.
The proposal would apply to thousands of women who have seen their state pension age increase.
In the report, the Committee said ministers should consider allowing the women in the group concerned to choose to take a state pension sooner than scheduled in return for lower weekly payments for the duration of their retirement.
The scale of the reduction would be calculated to ensure that, on average, over the lifetime of the pensioners involved, the proposal would be ‘cost neutral’ the Exchequer. An example in the report highlights someone getting £4.65 a week less if they take their pension nine months early.
For more – find out about the new state pension.
The state pension age is rising
The problem has arisen as successive administrations have sought to raise the state pension age for women to match that for men. This is to reduce the overall cost to government and to reflect changing life expectancy.
By November 2018, the state pension age will be 65 for both men and women, increasing to 66 between November 2018 and October 2020, and to 67 in 2028. The government will then review the state pension age every five years.
The government has been under pressure to put in place transitional help for the estimated 500,000 women born in the 1950s who have seen the age at which they can claim their pension jump from 60 to 66 with little notice.
More than 130,000 people have signed a petition asking for the government to consider ‘transitional arrangements’ to help women cope with the delay in qualifying for the state pension, which currently pays £115.95 a week.
For more – check your state pension age using the Which? calculator.
Government asked to explore options
The Committee chairman, Labour MP Frank Field, acknowledged that more research and consultation was required before such a scheme was introduced, but said that the idea could offer the basis for further discussion in government.
Frank Field added. ‘This interim report opens up the debate which I’m sure MPs from all sides will want to pursue. We will begin taking fuller evidence on the options as soon as possible.’
Conservative committee member John Glen added: ‘Lack of adequate notification of state pension age changes demands transitional arrangements, but implemented in an affordable way. This report recommends a possible way forward which the Government should now explore.’