Campaigners are urging ministers to back reforms that would allow people with a terminal diagnosis to draw their pension before the current retirement age

The Government is under fresh pressure to let terminally ill people access their state pension early, as thousands die in poverty each year despite years of contributions.

Campaigners, charities and cross-party politicians are urging ministers to back reforms that would allow people with a terminal diagnosis to draw their pension before the current retirement age.

New figures from end-of-life charity Marie Curie reveal that 111,000 people die in poverty annually in the UK – including more than one in four working-age individuals in their final year of life.

Those affected are often forced to rely on lower-level working-age benefits rather than the more generous state pension, despite often having paid national insurance (NI) for decades.

Under the current rules, no matter how long someone has worked, they cannot access the state pension until they reach the state pension age – currently 66.

Marie Curie is now leading the push for change through their Dying in Poverty campaign.

It is calling on the Government to allow terminally ill people – defined under special rules as having a life expectancy of 12 months or less – to claim their pension early based on their NI record.

If their income remains low, they would also be eligible for a top-up to pension credit level, ensuring a guaranteed minimum income.

The proposal has already gained political support across the UK, with Northern Ireland’s communities minister Gordon Lyons writing to pensions minister Torsten Bell, urging the UK Government to adopt the measure.

He said: “It is imperative that we do more to ensure financial security and dignity for people in their final months of life.

“A terminal diagnosis should not be accompanied by the added burden of financial hardship.”

On 31 March, the Northern Ireland Assembly unanimously backed a private member’s motion calling for legislative change. Ministers in Westminster are expected to consider the issue as part of the upcoming pension schemes bill.

‘A small change with a huge impact’

The cost of allowing terminally ill people to access their state pension early is relatively low – but the human impact could be significant.

According to research commissioned by Marie Curie and conducted by Loughborough University, the policy would cost the UK Government an estimated £114.4m per year. That’s 0.1 per cent of the annual £104.7bn state pension bill.

But that investment could halve poverty rates among terminally ill people of working age – from 26 per cent to just over 14 per cent – lifting around 8,600 people out of poverty in their final year of life, it said.

Individuals would be entitled to receive the amount of new state pension they have accrued through NI contributions.

Those with the full 35 years of contributions would receive the full state pension – currently £230.25 per week, while others would receive a proportionate amount.

If their income still falls below the pension credit threshold, they would be topped up to a minimum level through a new element within universal credit.

More than 90 per cent of people who die between the ages of 20 and 64 have made some NI contributions, and the average working-age person in this group has 24 years’ worth of NI credits, according to the charity.

What do the experts think?

Jon Greer, head of retirement policy at Quilter, called the current system “an anomaly that feels increasingly hard to justify”.

He said: “If we accept that people should have the right to defer their pension and receive a higher payment later, then logic follows that they should also be allowed to bring it forward in exceptional circumstances – particularly when they may not live long enough to benefit from it at all.

“From a policy perspective, a change in this area would not represent a significant cost to the Exchequer, but it could have a transformational impact for thousands of families.”

Former pensions minister Baroness Ros Altmann also backs the idea and said: “The current stark cutoff is deeply unjust as the starting age keeps rising and there is approximately a 20-year differential across the population between the healthiest and least well-off groups.”

The inequality is stark, with people who die in working age twice as likely to spend their final year in poverty compared to those who die after retirement, according to Marie Curie.

The state pension, it argued, is a far more effective safeguard against poverty than working-age benefits like universal credit or employment and support allowance, which often fail to cover the additional costs associated with terminal illness.

Mr Greer noted that while people with private pensions can often access their savings early as a tax-free lump sum, those relying on the state pension are left behind.

Not everyone is convinced

But while there is growing political support, some experts have warned that early access may not work for everyone – and risks adding complexity to an already confusing welfare system.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “This is a complicated area, and there are a number of benefits that can apply if you are in this situation.

“If significant numbers of people aren’t getting enough support from the current system, it may make sense to look more broadly at where these benefits are falling short.”

She added that people should also be encouraged to plan for the unexpected while they are still healthy.

Ms Coles continued: “It’s a useful reminder that anyone can face these horrible challenges. Having an emergency savings fund or protection policies like critical illness cover can make all the difference in those final invaluable months with loved ones.”

A Government spokesperson said: “No one should suffer financial hardship because of a health condition, especially people nearing the end of life.

“And our Special Rules unlock early access to certain benefits and support systems for those nearing the end of their lives.

“Our Pension Schemes Bill will increase the life expectancy threshold for support from 6 to 12 months, giving more people the help they need at the hardest time of life.”