A think tank has proposed allowing young people in the UK to withdraw a year's worth of their state pension early, in exchange for retiring a year later. The Social Market Foundation (SMF) says the policy, called 'Citizens Advance', would help 18 to 40-year-olds struggling with home ownership, student debt, and starting a family.
Under the plan, eligible individuals could access £12,548 at current rates, provided they have at least 10 years of National Insurance credits. They would then retire at 67 instead of 66. Polling by the SMF shows 54% of 25 to 40-year-olds support the idea.
Jamie Gollings, SMF deputy research director, said: 'Britain is facing a crisis of opportunity. Whether you can buy a home, pay down debt, or start a family increasingly depends on the wealth of the parents you were born to – not the work you've put in.' He argued the scheme gives younger people access to capital they have already earned.
However, some economists have criticised the proposal. Rachel Vahey of AJ Bell warned of a 'short-term gain' for a 'long-term trade-off', noting that younger people may be better off building their own retirement savings through workplace pensions. A Department for Work and Pensions spokesperson said state pension cannot be rebuilt once accessed early, potentially reducing later-life income.
The SMF estimates the policy would cost £1.3 billion in its first year if restricted to those born after 1998, settling at £7 billion annually, with 89% recouped through pension system savings and wider economic benefits.
