According to the think-tank, this would make the system fairer for manual workers.
In a paper sponsored by Age UK, the PPI said giving full state pension access to people with four and a half decades worth of National Insurance contributions could enable up to a quarter of a million people to retire earlier than they otherwise would have.
The state pension age is due to increase to 67 for men and women in 2028, meaning someone who started work at the age of 17 would have to work for 50 years before they were eligible for the state pension.
Under the PPI’s proposal, however, they would be able to retire aged 62.
John Adams, the PPI’s senior policy analyst and author of the paper, said: “With increasing life expectancies in the UK, it is understandable that the government might wish to increase the state pension age, but care should be taken to recognise the impact on people who may be unable to continue in work, for example, as a result of health issues or caring responsibilities.”
He said manual workers and those with caring responsibilities would be hardest hit by the rising state pension age.
In addition to the 45-year rule, the report offered three other policies to protect the vulnerable against the negative impacts of the increasing retirement age.
One was de-linking pension credit from the state pension age, and freezing it at 65. The report said this would help those on low incomes and the unemployed.
The second was allowing people to access the state pension earlier if they agreed to take less. The report cited the US and Canada as countries that allow this.
Finally, the report proposed allowing early access to particular individuals, such as those with disabilities or caring responsibilities.
Bernardo Hunte, a chartered financial planner with Aspect8, said the 45-year access rule was “in theory a good idea”.
However, he added that he could not see the state pension ever becoming “anything other than a safety net”.
He said educating people about taking charge of their own retirement planning was key, adding: “One should always regard the state pension as ‘block one’ of your pension planning.”
Elliott Silk, head of employee benefits at Sanlam, said while the options suggested by the PPI paper were positive in principal, enacting these measures was likely to be extremely complex.
He added: “For instance, if people with more than 45 years of National Insurance contributions have permission to receive their state pension at that time, employers may subsequently have to alter business plans – this could make it harder for businesses to plan further ahead.
“This option could also exacerbate the current skills gap by encouraging workers to forego further education and jump straight into the workplace at age 16 in anticipation of receiving the state pension at age 61.
“Additionally, allowing unreduced early access for particular individuals – for example, those with disabilities and/or caring responsibilities – would simply be too complex to implement. What happens when the person for whom they are caring dies? Is the early state pension suddenly switched off?”
james.fernyhough@ft.com
