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Steve Bee: Give people early access to state pensions

steve bee

The long-awaited Parliamentary debate forced by more than 140,000 signatures on the petition raised by the Women Against State Pension Inequality was held on 1 February. Following on from a previous debate held on 7 January, it really would have been more appropriate to have had it on 2 February – Groundhog Day.

The Government’s stonewall response was no different to last time and I would imagine it will remain the same if there is ever another debate. That is a disappointment to the Waspi women but the Government must too be disappointed with the way it has to hold the line against so many citizens with genuine grievances.

That the communication of the momentous changes to state pension ages was disastrously handled is beyond doubt, as is the demonstrable fact many women – and men – are living in reduced circumstances as a result.

The debate lasted well over three hours but there was no common ground established and no suggestions from the Government benches for any arrangements that might help alleviate the dire financial position so many people are now enduring. This issue will not go away, though. Surely the time has come for some kind of solution to be explored?

It seems to me the Government is keen to talk proudly of the pension freedoms it has introduced but fails to see the irony in those freedoms only applying to private pensions. The millions relying on the state pension are still in chains. But why?

The Government cannot afford to give money away but it does not have to. There must be sensible and creative ways it could amend the social contract between it and its citizens by extending new freedoms to the state pension system.

I do not mean people should be able to encash their state pension entitlement as they can their private pensions but that relaxations in the rigid rules could be removed. One avenue that should be explored is to allow all people, men and women, to draw their state pension from age 60, not at the full rate but at an actuarially reduced rate.

People are already allowed to defer drawing the state pension in return for an actuarially increased pension paid later and for fewer years, so why not allow early access at a reduced rate and payable for more years? I am sure the Government Actuary’s Department could come up with equitable rates to ensure the state coffers do not suffer as a result.

On its own, allowing early access to the state pension would not solve all the problems highlighted by the Waspi campaign, of course. But there must be other equally creative solutions that would help without coming at great financial cost to the Government or great personal cost to its citizens. You never know, it might even stop people in future thinking our state pension is in a state.

Steve Bee is director at Jargonfree Benefits



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There are 8 comments at the moment, we would love to hear your opinion too.

  1. How would this work with means-tested benefits? AT the moment the SRP can be topped up by Pension Credit. If this were allowed for early, lower paying, pensions then it would just add more to the state’s costs and give people the same income as they would have by not taking the pension earlier. If it wasn’t permitted then it would create extremely complex new rules for the benefits system.

  2. April 2017: The government gives everyone the “right” to take their State Pensions at 60, at a reduced rate.

    April 2017 +1 second: Everyone starts to draw their State Pension at 60 and retire. (Almost nobody defers their State Pension. Apart from a foresighted minority with special tax circumstances.)

    November 2017: Everyone complains that they haven’t got enough money to live on and the State Pension is too low. Facebook petitions are set up with vague demands for fairness and zero detail. A campaign group known as State Pension Is Their Expectation – Fair, Universal and Lovely sends vicious poison pen letters to anyone who dares question the right to retire at 60. The Daily Mail prints photos of retired soldiers and nurses looking pensive in their kitchen. The Mirror draws comparisons between the £120 a week paid to a retired social worker and the £300,000 a week paid to a Premier League footballer who makes millions for his club and whose shirts are worn the world over. We’ve paid in all our lives, yadayadayada.

    March 2018: Government gives in, abolishes the “option” of early retirement, and gives a temporary top-up benefit to the dimwits who packed in work at 60 with no other provision. Funded by raising the State Pension age to 70 on a sliding scale and the end of EET pensions to ensure the young (who are oblivious to all of this) have to pay for it. SPITEFUL stand on the steps of Parliament and declare a victory for fairness. And what’s another trillion on the national debt anyway?

    Hey, you said we should explore that avenue, so I did, and it’s a terrible idea. We have a dire surplus of creative solutions to pensions right now.

  3. Trevor Harrington 16th February 2016 at 8:12 pm

    Whichever way you look at it, there are certain fundamental issues which are either absolutely necessary or apparently insurmountable at this time.

    First of all, it has to be accepted that the reduction in state pension, and the extended ages at which you are allowed to receive it, is the only way by which we, as a Country, can realistically hope to eliminate the budget deficit, and then repay the national debt … in the short term (20 years?).

    Second, is the realisation that the tax revenues in this Country are some of the highest in the World, by a considerable margin, and so we must ask ourselves – where is the money going? As a society, If we cannot afford to live by the current structure of who pays what, how much, and who receives the benefits, then where is it all going?

    We have lived in an entirely unaffordable social structure for many decades, and until recently it was getting dramatically worse year by year, whereby unaffordable benefits have been paid to those in the public sector. In simple terms, those creating the wealth in the private sector can no longer afford to pay the huge figures and benefits that have been awarded to those in the public sector.

    By “figures” I mean the levels of salary afforded to those in the middle, and at the top of the public sector function, where there are far too many of them, and they are being paid at private sector rates when there isn’t even the risk of profit or loss, and by “benefits” I mean the huge pensions that they receive, way too early in their working life, and the ridiculously short working week where most do not even “clock-on” (or turn up on time), and only work a formal 35 hour week anyway.

    The invisible ballooning costs, which have crept up on us over many years, is where the managers in the public sector have awarded themselves ever bigger pensions, and at earlier and earlier ages, when the payer of these constantly enhancing pension benefits have had to be paid for by the employer – the Government – us in fact.

    The question is … how do we curtail these exorbitantly excessive benefits without causing a general strike, because it is only then that we can redress the balance, and look toward to a realistic liveable state pension at age 60 for everybody.

    There are certain things which we could do to achieve this within ten years. In other words, we can eliminate the budget deficit, and we can make strong inroads to redeeming our national debt, whilst also aiming for a return to a realistic state pension at age 60.

    However, that will take great deal of discussion, knowledge and understanding within the public at large, and a great deal of recognition of the fundamental problems noted above. That can only come from the point where we all stop lying to ourselves, and notably that the politicians become empowered to stop lying to us also.

    Just because someone is a teacher, or a nurse, or a policeman or a fireman, does not mean that they are gods to be worshipped every time they do the job which they are in fact paid to do … as it happens … very amply paid indeed.

    There are trade-offs to be made here, and it will have to come eventually, whether we as individuals like it or not. Whether we take ten year or 30 years to recognise it is our choice.

    For instance, perhaps the public sector would not mind too much if their occupational pensions were all set to provide benefits at age 65 like the erst of us, if everybody’s state pension, including theirs, was set to provide benefits at age 60, and at say £200 per week.

    I am not saying that these precise figures are correct, but the principle is there to be discussed. We simply cannot afford to fund certain sections of the working public to retire at age 60 or earlier (all too often on the usual faked and fraudulent ill health claims), when the remainder of the working public, as it happens – the profit makers, cannot retire until age 67.

  4. Trevor Harrington 17th February 2016 at 10:13 am

    Paul – thank you for making the effort to comment x

  5. Hell yeah man !!! Turn on, tune in and drop out !!!!

  6. But then the Government has promised a 25 year moratorium on further changes to public sector pension schemes, buy which time all the MPs and policymakers etc will have retired at 60 or earlier on their gold-plated pensions!!!

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