The Work and Pensions committee has called on the Government to allow women affected by hikes in the state pension age to take their pot early, at a reduced rate.
The proposal comes in response to the Women Against State Pension Inequality campaign, which has argued increases in the state pension age have been poorly communicated and are unfair to a specific cohort of women born in the 1950s.
In particular, the Pensions Act 1995 set out a timetable for increasing the state pension age for women from 60 to 65, with the subsequent Pensions Act 2011 accelerating the equalisation of men’s and women’s state pension ages at 65 to November 2018.
The state pension age for men and women will then rise to 66 by November 2020, before increasing again to 67 between 2026 and 2028.
The Waspi campaign claims the 1995 and 2011 changes were poorly communicated and did not give women enough time to plan for retirement.
In response, the committee has proposed allowing those women most affected to draw their pension early. However, it acknowledges such a policy would increase Government spending by an unknown amount in the short-term.
Committee chairman and Labour MP Frank Field says: “This interim report opens up the debate which I’m sure MPs from all sides will want to pursue. We will begin taking fuller evidence on the options as soon as possible.”
Committee member and Conservative MP John Glen MP adds: “Lack of adequate notification of state pension age changes demands transitional arrangements, but implemented in an affordable way. This report recommends a possible way forward which the Government should now explore.”
If the option were pursued, policymakers would also need to decide whether to open it up to men as well as women.
Some in the industry have even suggested the early state pension access could be rolled out universally to those aged 55 and over, effectively extending the pension freedoms to the state system.
However, such a policy would leave the Treasury exposed to a potentially large and difficult to measure cashflow risk at a time of huge economic uncertainty.