Rachel Reeves is being urged to consider a bold plan allowing Millennials to access their state pensions early to climb the housing ladder.
Labour MP Andrew Lewin has proposed a scheme where under-40s with a decade of National Insurance contributions could withdraw £11,500 in exchange for delaying retirement by one year.
Supporters of the initiative argue it could alleviate financial pressures on young people, while critics warn it risks wasting taxpayer money and adding complexity to the pension system.
Mr Lewin said the scheme would reduce reliance on the “Bank of Mum and Dad,” which many young people currently depend on for financial support.
He said:“For millions of people, getting on the housing ladder, changing careers, or even starting a family depends heavily on parental support.
“As a new Labour MP, I want to extend opportunities to those who don’t have that safety net. Giving people with 10 years of work behind them access to a year of their state pension early could be transformative.
“For many, £11,500 is the difference between achieving crucial life goals or remaining stuck.”
The plan would see individuals agree to delay retirement by one year—for example, from 68 to 69—in return for an immediate lump sum.
A recent analysis by Zoopla found that first-time buyers supported by their parents received an average of £65,004 to cover deposits, legal fees, and renovations.
Theo Bertram, of the Social Market Foundation think tank, described the proposal as an “innovative” way to help young people invest in their future.
“This plan is compelling because it allows young people to borrow from their future selves rather than rely on handouts,” he said.
However, financial experts remain cautious. Helen Morrissey of Hargreaves Lansdown warned that such a scheme might exacerbate future financial issues.
She told the Telegraph: “We need to ensure that solving today’s problems doesn’t create new ones for tomorrow.
“Healthy life expectancy is still in the early 60s. If people find they need to retire earlier due to health issues, delaying state pensions could leave them financially vulnerable.”
She also highlighted the administrative challenges, calling the proposal “extremely complex” and warning it could add confusion to an already intricate system.
Jason Hollands, of Evelyn Partners, echoed concerns about affordability and misuse.
“While the idea sounds interesting, it’s uncosted and could lead to a surge in requests at a time when public finances are under severe strain,” he said.
“My concern is that there’s no guarantee the £11,500 would be spent responsibly. Some might squander what is essentially taxpayers’ money rather than using it to invest in their future, such as buying a home.”
He added: “While I sympathise with young people facing financial pressures, this scheme risks leaving them in a worse position later in life.”
The debate highlights the growing tension between immediate financial pressures and long-term security, as policymakers grapple with how to support younger generations without jeopardising the future of public finances.
