Would you take £12.5k now to access your state pension earlier?

[AllaMova]

The Government are apparently considering allowing people under the age of 40 to take a £12.5k lump sum in exchange for being able to access their state pension a year later. You’d need at least ten years of national insurance contributions in order to qualify, if it goes ahead.

Would you take this?

I think I would - I could stick it in a S&S ISA, in order for it to grow over time. I think it’s a pretty good idea, especially for those who are looking to buy a house.

https://www.theguardian.com/commentisfree/2026/jun/09/young-people-money-citizens-advance-generations-older-people

I think you mean a year later, not earlier.

You’re right, I just edited my post. Apologies.

Do you mean delay taking it and then get a lump sum at 67 or whatever?

It’s not an awful idea, but 12k wouldn’t really go far with house prices round here, South East. Might work better if you could do 2 or 3 years swap. I suspect SP age will be 70 before long anyway!
Would people be free to do as they wished with it? I could see people blowing it on a holiday and then grumbling they couldn't retire with their peers. Perhaps it needs restrictions on what you could do with it - house deposits, investment, etc.

Not a chance. The only way people are going to get on the housing ladder and out of poverty is by the government coming up with a substantial discount scheme like the boomers had in the 1980s.
£12500 when 2 bedroom houses start at £200000 and you have to then work an extra year. What an absolute joke. Get rid of this government.

Its a bad idea for countless reasons.

Most people already struggle to make it to 67 working. This is likely to mean the poorest (who are more likely to be in ill health) struggling on in work because they can't afford to retire.

Or it will mean people being pushed on to benefits in their 60s because they can't afford to retire but become increasingly less attractive to employers.

It’s just a think tank, not an actual government consideration?

100% - one in the hand is better than 2 in the bush. There is no way this policy would be rolled out though…

I would take it and put it into my pension investment fund personally. I've got another 31 years until retirement age, 1 extra year until state pension kicks in would mean nothing materially when I could double my money and then access it at 55 if I wanted to

The danger to me seems to be that better off people who may be able to retire early anyway with their private pension would be able to get an extra 12.5k to do whatever with - invest etc.

I don't see how this would help poorer people, especially if they receive UC as they'd have money deducted for having over 6k - no option for them to put it in a stocks & shares ISA.

1 would take it. People who pay in most of their lives but die before they reach retirement age get nothing at all out of their contributions. This way, whatever happens you get the equivalent of one year's pension at today's rates. If you don't reach retirement age they are not going to try to get it back from your estate after you've died.

The problem is that when government tinkers with the ending of working life, the more it has consequences for the beginning of working life.

So the more people put off retirement, the fewer chances there are for new people to the work place.

we've already got over a million NEETS in the under 18 category. If more people postpone retirement, the fewer the jobs for younger people.

And, by the way, I'm not in any way suggesting I have a solution. I dont.

I'm just pointing out the quite obvious unintended outcomes of this particular solution.

No, I wouldn't do it. But it's too late for me anyway and if I was asked at a young age I might have said yes. But I'm in my 50s now and sick of working and definitely don't want to delay my state pension, which I will need.

I'm a boomer, b1960. What discount scheme was that in the 80s?

No I wouldn't take £12,500 early. Roll on October!

So if they have to increase pension age by another year (or two or three whatever) in future, the people who took the money will always have to work one more year on top of that? That could get out of hand.
OTOH if they took the money now and it meant they then expected to work only until 68 that would be fine until everyone is told they have to work til 68 but plenty of them didn’t take the cash up front. There’d be riots.

Houses being sold off at £20000 and you don't think that's a substantial discount?

I would

I would. Most people will have some form of workplace private pension to bridge the gap.

It's been suggested that it's used to clear debt or put towards a mortgage deposit.

There are so many people stuck in the rental trap or up to their eyeballs in debt just trying to survive the COL.

The 12.5k will be much more beneficial to these people now and improve their quality of life so much. They will benefit more than they lose with working an extra year.

I’d take it and stick it in my S&S ISA or work pension. It could be worth around £40k if it grew at an average rate of 6% each year for 20 years. Would need to account for inflation, but I imagine it would still outweigh the value of my first year of my state pension in real terms.

To whom? What was the market rate? I wasn't offered a discount in the 80s.

Surely its better than nothing, its giving options.

That was my thought too. If I wasn’t already a homeowner though, I’d put it towards a house deposit.

I doubt this scheme will ever come into fruition, but it is a nice thought.

The problem is lower earners are taxed too much and arent building up pensions.
better to increase the tax back on pension to say 30% or 40% for all.
And to increase the allowances eg for unemployed as currently 2880 a year.

Raising the tax threshold from 12k would help too.

Making anyone work older than 68 is crazy as most will just be on illness benefits
And many dont put in the full ni for pensions but get it made up by pension credit.

Have a more flexible lifetime isa instead. To use for paying your kids uni costs
and not count as savings be more like a pension

cost of living os so high most peoples pension pots arent going to fund years between say 60 or 64 to 68. You would need about 80k just for that.

Also all of what would be all our pensions is being spent on housing benefit where so many people have to rent and cant afford it.
We have a house. If we didnt in retirement it would cost 24k a year in housing benefit..
And that probably more a year than most couples are paying in tax

That’s always been the case it’s not a new thing