Women who are suffering as a result of rapid increases to their state pension age, should be able to access the state pension early, according to a group of MPs.
The recommendation from the Department for Work and Pensions (DWP) Select Committee would allow women born in the 1950s, who have seen their state pension age rise from 60 to 66 by 2020, to start claiming their pension early in return for a lower weekly payment.
According to the report, a woman born on 6 January 1955 who is scheduled to reach state pension age on 6 January 2021 aged-66 and get a weekly payment of £155.65, would see her weekly income fall to £149.58 (a loss of £6.07 a week) in the 2016/17 tax year if she retired nine months earlier.
See our Guide to the new state pension.
Tom McPhail, head of retirement policy at Hargreaves Lansdown says this would be a cost neutral move for the government which might go some way in appeasing women who feel that changes to the state pension age were not adequately communicated.
“Politically this could be quite attractive as it would show the government is listening and is sympathetic, without it actually having to cost any money,” he says.
The proposal follows the announcement, earlier this month, that John Cridland OBE, is to conduct a fresh review of the state pension age, raising the threat of further increases to the state pension age.
As such, Steve Cameron, pensions director at Aegon says that this level of flexibility should be offered to all retirees irrespective of gender.
“Last year the Chancellor revolutionised retirement choices by offering all those with a private ‘defined contribution’ pension vastly increased flexibility around when and how much they could take from their pension. The next logical step would be to offer new flexible choices within the new state pension.”
He adds: “ While average life expectancy is increasing, ‘healthy’ life expectancy is much more varied, and working to more advanced ages may not be feasible for all based on health or the challenges of a particular job. This means further increases in state pension age have to be accompanied by flexibility for individuals to decide to take a reduced amount from an earlier age.”