Aegon, a pension provider, is calling for a new system that would let people claim their state pension up to three years early. This comes as the state pension age is gradually rising, with the current increase from 66 to 67 set to complete by April 2028.
Early access proposal
Kate Smith, head of pensions at Aegon, said: "We need a system that offers realistic choices, that better reflects people's lives, not a cliff-edge. An early access system could provide a vital financial bridge."
Under the proposal, savers could draw their state pension early but at a reduced weekly rate. Smith said: "This flexibility should be open to everyone, but it is explicitly designed to throw a lifeline to manual labourers, carers, and those battling ill health who physically cannot work until 67 or 68."
Concerns about poverty
Smith warned that taking a reduced pension could push people into poverty. She said: "Taking a reduced state pension risks dragging people into poverty, meaning the UK Government must be prepared to think outside the box."
She added: "Employers must also step up, collaborating to design flexible roles, phased retirements, and age-inclusive workplaces, higher workplace private pension contributions, that allow older workers to transition with dignity, rather than out of financial desperation."
Opposition to faster rise
There have been discussions about bringing forward the next state pension age increase from 67 to 68, currently scheduled for 2044 to 2046. Smith firmly opposes this, saying: "Rumours persist that the shift to age 68 will be brought forward to the late 2030s. Accelerating this timeline is an incredibly bad idea that will unfairly shock the system and hit the most vulnerable hardest."
The full new state pension currently pays almost £12,550 a year. People can check their state pension age and forecast using tools on the Government website.
