Pensions expert makes case for early access to state pension at 63

A pensions expert has suggested providing early access to the state pension at a reduced rate. The question of what age people should access their state pension has come to the fore, as Labour has announced the next review of the state pension age.

The access age is currently 66 for both men and women but is increasing to 67 in stages between April 2026 and April 2028, and then to 68 between 2044 and 2046.

Experts at wealth firm Aegon think there should be a system where people can access their payments early. Pensions director Steven Cameron said: "We support giving people the choice to draw it say up to three years earlier, at a reduced amount to make it financially fair for all.

"An alternative would be to commit to allowing access from not later than say age 68, at a lower amount, even if the state pension age increases thereafter."

He pointed out that while people have the option to defer receiving their state pension beyond when they reach the state pension age, with the potential for higher payments as a result, there is no flexibility to access your DWP payments early.

The last review of the state pension age, carried out by Baroness Neville-Rolfe, suggested allowing certain groups of people early access.

But Mr Cameron is not convinced this would work well. He said: "We believe giving special terms to particular groups would be extremely difficult to implement fairly.

"Who would decide which 'jobs' qualified? How would this be monitored? Instead, we favour the Government exploring allowing everyone the option to access their state pension a little earlier, at a reduced level to make financially fair."

Turning to the topic of the upcoming review of the state pension age, Mr Cameron said key considerations will likely be how to keep the state pension affordable and sustainable.

He explained some of the difficulties here: "The state pension is highly valuable, but also highly costly to provide. It is not funded in advance but paid for from income tax and National Insurance of today's workers.

"Because of increased life expectancy, the number of people living longer is increasing and the number over state pension age is also rising as a proportion of those of working age. So costs need to be controlled."

He said one factor that will encourage the Government to move up the state pension age is the fact the triple lock keeps increasing the state pension bill.

The policy ensures the state pension goes up each year in line with the highest of 2.5 percent, the rise in average earnings or inflation.

State pension rates went up 4.1 percent this past April in line with the policy, with the full new state pension now paying £230.25 a week.