State pension age freedoms: Rishi Sunak urged to offer early access to payments
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In the past, state pension age stood at 60 for women and 65 for men, however a series of changes have been taking place, with some more to come. State pension age parity of 65 was reached between men and women back in November 2018, and as of today, the state pension age for men and women for anyone born between October 6 and April 5, 1960, 1954 has risen to 66.
However, it doesn’t stop there, as further changes are in the pipeline.
Under the Pensions Act 2014, the state pension age for both men and women is set to rise to 67 between 2026 and 2028.
Amid the increases, the Government has been called upon to instead alter the rules and enable people to access their state pension early.
Currently, state pension age must be reached in order to get the payment, however it is possible to defer the claim.
Baroness Ros Altmann, a former pensions minister, has said older people should be allowed to draw their state pension early amid worsening employment prospects during the COVID-19 pandemic, the Telegraph reports.
“Allowing early access, even at a reduced rate, could offer a lifeline to those who want to benefit from their many years of National Insurance contributions, rather than the unrealistic reliance on out-of-work benefits,” she said.
“It could help many women and many who are seriously ill or need to care for loved ones.”
More flexibility on when people can access the income is something which Aegon has today joined the calls for.
The firm has suggested everyone be offered the option to take their state pension from the age of 63, with this being subject to a reduction in its weekly amount.
While the state pension can’t be accessed until age 66, it’s possible to access private and workplace pensions 11 years earlier, from age 55.
Commenting, Steven Cameron, Pensions Director at Aegon said: “In the private pension space, pension freedoms have proved hugely popular in allowing people to take more control over when they start drawing their defined contribution pension, currently from as early as age 55 increasing to 57 in 2028.
“But this is not reflected in the state pension where as of today (6 October) the minimum access age is 66 for all, and will increase further to age 67 in 2028.
“The higher the state pension age is, the more difficult it will be for those in stressful or manual occupations to keep working until state pension age.
“On top of this, the fall out of the COVID-19 pandemic may see an increasing number of those in their early 60s losing employment and struggling to find a new role.
“In these unprecedented times, we’d welcome the Government exploring allowing people to take their state pension from an earlier age, perhaps 63, at a reduced amount to reflect the fact it is starting earlier and will be paid for longer.
“People can already defer taking their state pension until later, receiving an uplift for doing so, and this would effectively mirror this facility at younger ages.
“Offering early access at a reduced level could be a big help to many thousands of individuals as a means of supplementing private or workplace pensions.
“There would be a need for some checks and balances to make sure people don’t end up with an income from state and private pensions combined below the means tested benefit threshold.
“But with some creative thinking, solving this shouldn’t be insurmountable and could be well worth the prize if it helps more people in the uncertain times ahead with a flexible transition into retirement.”
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