Brits under 40 could claim £12,548 early pension payment under new proposal | Personal Finance | Finance
Young Brits could soon be allowed to access a year’s worth of their state pension early, according to a think tank. The incentive from the Social Market Foundation proposes that workers aged between 28 and 40, who have ten years of National Insurance credits, will be able to claim a payout worth £12,548.
National Insurance is paid when you earn more than £242 a week, and helps you qualify for certain benefits and state pension. In the UK you can claim state pension at the age of 66, which will go up to 67 by March 2028.
While the early payout may sound great for some, it is important to know that those who do claim it will have to work for an additional year before claiming the state pension.
It is believed that the proposal could cost up to £1.3 billion in the first year of its roll out, but could increase to a cost of £7 billion as more people become eligible, The Sun reports.
More than half of 25 to 40 year olds surveyed are behind the proposal. The idea comes as one in four adults could not afford to pay an unexpected £850 bill if they were faced with it.
A significant proportion of those surveyed shared that they would consider taking the early payout.
This April saw the state pension increased by 4.8%, and if it continues to rise then when the time comes for younger Brits to retire, their pension could be worth thousands of pounds more.
That being said, if deciding to take cash out now, some of that growth could be missed out on.
A Department for Work and Pensions spokesperson said: “Unlike other savings, a State Pension cannot be rebuilt once accessed ahead of time, meaning those who do so may find themselves with reduced income later in life.
“We want to help people reach major life milestones such as buying a house which is why we are boosting housing supply and addressing the cost-of-living head on through initiatives such as taking money off energy bills to put more money in people’s pockets.”
