You may be reading this heading and thinking surely there is a typo in the title - there is no such error.
Although this is in the very early stages, Andrew Lewin MP is exploring plans that might see a form of financial support being introduced primarily to provide support to young people but not solely limited to this group.
Given the time period for NI contributions (10 years) it is expected that the minimum age would start at age 26, but realistically proposals are that the starting age group would be in the early thirties.
The MPs proposal is centered around providing access to a cash lump sum totaling £11,973. to be made available to anyone that has paid NI contributions for at least 10 years, so what’s the catch?
The money will be granted by allowing early access to one year of your state pension funds, but this also means that you would be expected to delay your state pension age by one year. With the anticipated state pension age set to rise from 67 to age 68 between 2044 and 2046, this means pushing back the state retirement age to 69 before being able to claim your state pension.
Individuals will have the option to repay the monies under terms yet to be established, suggestions are that this will form the basis of some form of loan repayment agreement and if the funds are fully repaid individuals will have a reset of the date that they can claim their state pension which will drop back to age 68.
So far indications are that there will be no restrictions on what the funds can be used for, which in itself might appear surprising, but there are still many more points to consider. Suggestions are if individuals meet the eligibility criteria the funds might be used as a downpayment on a deposit to purchase homes or used to fund educational training courses.
There are many outstanding questions that will need to be answered, floating the idea might seem good conceptually, but details of how the scheme will work and what implications this might have, for example who will administer the scheme, how will government ensure the funds are being used appropriately.
Will there be any tax implications or will employers be required to administer any repayments through recovery from salary.
How might taking lump sum amounts impact future pension pots?
The MP has launched a video campaign in conjunction with the Social Markets Foundations to obtain views and suggestions to his concept to aid research, before considering the next steps which will be to create a detailed policy for further debate.
