New research has shown that people want more choice over when they receive their state pension, even if it means they get less for taking it earlier.
People want more flexibility
In the survey, PricewaterhouseCoopers (PwC) polled over 2,000 adults about the state pension system asking them how much flexibility they want to potentially take the pension at a more convenient time.
The main findings were that four out of 10 of those surveyed want choice over when they can access their state pension. One in four said they would opt to retire earlier than a fixed state pension age even if it means receiving a reduced amount for the full life of their pension.
Nearly half (47%) of those asked who want to receive their state pension earlier would be prepared to take a reduction of more than £450 a year for the life of the pension, in order to take it one year earlier.
Go further: State pension explained – find out more about the state pension.
Creating a ‘state pension window’
PwC suggests that one way to tackle people’s appetite for more flexibility on when they can access their state pension is to dispense with the concept of a single state pension age and instead introduce a ‘state pension window’.
It says this would be the final essential piece of the Government’s ‘freedom and choice in pensions’ proposals by also allowing people to choose when they receive their state pension between a range of ages, and receive an adjusted amount for the life of their pension based on their chosen start date.
Providing more flexibility in the state pension system would match the reforms to workplace pensions, following the Government’s announcement in the Budget that it will no longer require people to buy an annuity at retirement.
Go further: The pensions shake-up – the requirement to buy an annuity will disappear.
Ditch ‘one size fits all’
Raj Mody, head of pensions at PwC, said: ‘It is clear a one size fits all state pension age does not work anymore. A more flexible state pension system will place retirement decisions firmly back in the hands of workers and companies.
‘A more flexible state system completes the fundamental pensions reform George Osborne is keen to deliver and will bring pensions and retirement savings firmly into the modern age where people want flexibility, choice and control.
‘We need to create a state pensions system which is fairer, more stable and sustainable in the long term. Scrapping the state pension age and replacing it with a state pension window will produce better outcomes for people, companies and the Government.’