The Pensions Policy Institute (PPI) and Age UK have called on the government to provide early access to the state pension for those within three years of their state pension age  who are unlikely to be able to work again due to caring responsibilities, a disability, or long-term joblessness caused by the Coronavirus pandemic.

Financial Planner and wealth manager Quilter welcomed the call for flexibility but warned that protections need to be in place such as a requirement to consult a financial adviser before accessing the state pension earlier. The wealth manager also called on the government to consult on flexible state retirement benefits.

The new report from the PPI said that in the five years between 2012 and 2017, the difference in life expectancy between the most deprived and least deprived individuals (men and women) grew by 8%.

Unemployment amongst those close to retirement has risen sharply during the pandemic. According to the Office for National Statistics, in the three months to September 2020 there were over 340,000 aged 50 to 64 who were unemployed, an unemployment rate of 3.6%. This represents an increase of around 85,000 over the quarter.

The report from the PPI also highlighted that for those on the lowest incomes, even before the pandemic, many were struggling to make it to the state pension age.

Ian Browne, pension expert at Quilter, said: “The pandemic has revealed numerous gaps in our society and policymaking over the past months and some are still beginning to emerge. Today Age UK and the Pension Policy Institute have highlighted the widening inequality between the rich and poor in later life. It would be remiss to dismiss this as specific to the situation created by Covid-19 and thus simply fixed by the vaccine

“As part of the package of responses suggested by Age UK and the PPI it is vital the government consult on flexible state retirement benefits and find a way for people to access their state pension earlier in life at a lower rate. Although it is already possible to delay taking state pension income, with the individual receiving a higher state pension income as a result, there is no option to trigger state pension payments to begin at a discounted rate earlier than the state pension age. Astonishingly in some parts of the country healthy life expectancy is below 67, which means part of population will never see a penny despite years of work.

“Offering the flexibility to take state pension income earlier is consistent with the move toward greater freedom and choice over retirement lifestyle as heralded by pension freedoms. Obviously this will not be a choice that should be taken lightly and we would urge protective measures, such as a requirement to consult a financial adviser or Pensions Wise before exercising this option in order to provide adequate safeguards.”

Caroline Abrahams, charity director at Age UK, said: "This new report shows just how much inequality there is among older people, even before the pandemic took hold - an important reminder that the differences in income and wealth within generations are greater than those between them. Given the impact of the pandemic on the jobs market, we strongly believe that it is only fair for some groups who are within three years of their State Pension age to have early access to their full State Pension. We are thinking particularly of people who are never likely to be able to work again because of caring responsibilities, a disability, or because their chances of getting another job are particularly slim."