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