Terminal Illness: Early Access to Pensions

Dave Doogan Excerpts

Tuesday 2nd May 2023 Westminster Hall

[Dave Doogan (Angus) (SNP)]

I beg to move,

That this House has considered early access to pensions for people with a terminal illness.

It is a pleasure to serve with you in the Chair, Mr Sharma. In the United Kingdom, it is not possible under any circumstances to access a state pension before retirement age—not even if a person has paid national insurance contributions for the full 35 years, is terminally ill, and have less than a year to live. The purpose of the state pension is to support all of us towards the end of life, at a time when we are less capable or incapable of work, yet people with a terminal illness, who are nearing the end of life and, in the majority of cases, are no longer able to work, are not entitled to draw on their state pension, regardless of their contributions, financial difficulties or personal or family situation.

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

Terminal cancer patients who have surpassed their life expectancy have been told by firms such as Legal & General that they are ineligible to access their pension early because they may live longer. People are being punished for defying their life expectancy. Does the hon. Gentleman agree that people with a terminal illness should be given the dignity and respect of being able to access their own pension early?

[Dave Doogan]

I absolutely agree. Dignity and respect is at the heart of that ambition, as she so clearly articulates.

I start the debate with an appalling statistic. More than a quarter of people who die before retirement age spend their final days in poverty. In my Angus constituency, that figure is 24%. It is awful to think that for so many people with terminal illness, their last days are filled with worry and fears that go beyond the illness with which they have been diagnosed. Marie Curie reports that many terminally ill people feel stress about keeping a roof over their head, paying for their children’s school uniform or the energy use of their specialist medical equipment. As far as possible, the last days of life should be spent surrounded by friends and family, making happy memories in comfortable surroundings.

My constituent Ian Bain, from Forfar, was diagnosed with motor neurone disease in 2014. Mr Bain worked his entire life. He started work in 1977, and accrued 41 years of national insurance contributions—six more than necessary to entitle him to a full state pension on retirement. When he stopped working due to illness, there was no way for him to access his state pension, because he was not yet 65. Due to Department for Work and Pensions delays, he also did not receive any social security payments until nine months after applying. Mr Bain was not entitled to claim under the special rules, as he had been advised that he had more than six months left to live. When he did eventually start receiving payments, he received them only at the lower rate of the personal independence payment and employment and support allowance.

Although Mr Bain had been diagnosed as terminally ill by a medical practitioner, he was required to return annually for follow-up assessments to see if his incurable degenerative condition had improved. He was even informed by one assessor that he “looked well”—cold comfort if ever there was. It was only in 2021 that Mr Bain started receiving the higher rate, when he was moved to the Scottish Government’s adult disability payment. Mr Bain can no longer speak to me on the telephone and has to use a single finger to email me. He should not face the indignity and stress of continually having to jump through bureaucratic hoops for a pittance, while the pension that he has so completely paid into for decades is denied to him by the tightest of all fists.

Sadly, Mr Bain’s situation is far from rare. Another Angus constituent, Ross, told me that his father

“died of cancer in 2019 just 2 days before being able to draw on his pension, he had spent his whole life working. He paid his contributions religiously from the day he was able to work and got nothing back.”

My constituent Malcolm advised:

“When you hear someone tell you that you have cancer, you immediately think you are going to die. That thought automatically triggers the need to make sure for the provision for your loved ones. The only thing we should have to deal with is building up happy memories for those left. This is more difficult when money is in short supply due to escalating costs.”

Another Angus constituent said that her husband died of a glioblastoma

“4 months before he retired. He worked his entire life and was never off sick or claimed benefits once. Once he was diagnosed I had to battle to get assistance. He should have been able to access his state pension early.”

It would have made all the difference. She continues:

“it would have helped with the financial strain.”

Access to funds for the terminally ill is a problem across these islands. People are twice as likely to die in poverty if they are terminally ill and under 66 years of age. The reasons for this poverty are well understood. People with terminal illnesses very often cannot work. Two thirds of terminally ill people rely on benefits as their main or only source of income. At the same time, costs can often increase dramatically at the end of life. The additional cost of terminal illness can reach up to £16,000 a year. There is often a need for energy-intensive specialist medical care in the home. Many people need to keep their home warmer, and their energy bills increase dramatically. All of us in the United Kingdom are exposed to inflationary pressure and sky-high energy costs, but for the terminally ill, the situation is permitted to become even more dire.

The Scottish Government have acted to mitigate some of the financial and bureaucratic pressure on those experiencing terminal illness. Scotland is introducing its own extra costs disability assistance benefit, having already introduced the child disability payment and adult disability payment, which replace the disability living allowance and personal independence payment. It is working towards the introduction of a further payment to replace the attendance allowance.

The Scottish Government have also changed the definition of “terminal illness” used to allow access to benefits from the 12-month special-rule definition used in England to an indefinite definition that includes all people diagnosed with a terminal illness. This allows people to be fast-tracked to receive the highest rate of payment as quickly as possible, and for longer. The central principle of the approach is to ensure that terminally ill people are provided with the support that they need, when they need it. That approach represents nothing more than the dignified acceptance of a terminally ill person’s circumstances. It is simply doing the right thing. Those changes are welcome and will do much to improve the experience of those with a terminal illness living in Scotland, but the fact remains that their state pension is kept from them, no matter how long they have paid into the system. The Scottish Government have no power to intervene when it comes to that injustice.

People with terminal illnesses have often paid enormous amounts of national insurance. On average, people aged 20 to 64 who are in their last year of life have accrued 24 years of national insurance contributions, and will never see the benefit of that investment, yet the path to improving the situation is straightforward and affordable. France, Germany, Italy and Spain all provide for early access to the state pension in the event of disability, and for those found to have a terminal illness.

Research conducted by Loughborough University found that giving working-age terminally ill people access to their state pension could almost halve the rate of poverty in that cohort, lifting more than 8,600 people a year out of poverty at the end of their life. That change would be not only effective but extremely affordable. It is estimated to cost £144 million per year—just 0.1% of the annual state pension bill—and would make an immeasurable improvement to the dignity and life of some of the most vulnerable people in our communities, and their families. It is also fair. People pay into a state pension their whole life to ensure a comfortable end of life, but when they reach end of life, the UK Government tell them that they will keep the money. How can that be? To put it another way, the UK Government are saving £144 million per year by withholding access to state pensions from terminally ill people. That is unconscionable.

Members not just from my own party but from across the House have asked the UK Government to consider permitting terminally ill people to access their state pension, regardless of age. Many Members in this debate and beyond fear that the Minister’s response will echo previous Government responses—that she will say that terminally ill people already get access to benefits, or that those in their final years of life will have their applications fast-tracked. Those measures have failed to avoid the extraordinarily high rates of poverty among the terminally ill, they do very little for those diagnosed as having more than 12 months to live, and they are clearly insufficient in supporting people during what can be one of the most devastating and frightening periods of anyone’s life.

I hope that the Minister will give this humane and decent aspiration the due consideration it deserves, and that the Government will change the rules for terminally ill people not just in Angus but across these islands.

--- Later in debate ---

[Dave Doogan]

Thank you very much, Mr Sharma. I thank all hon. Members for their contributions to this important discussion. I am disappointed, if I am honest, that so much of the oxygen in the room has been devoted to private pensions. There is a fundamental—and, dare I say it, fundamentally clear—distinction to make between private pensions and state pensions. People in the workplace have a choice over whether to take out a private pension or not; they do not have a choice over whether to pay their national insurance contributions. I would suggest—respectfully—that that is a fundamental, fairly obvious difference between private and state pensions.

In her summing up, the Minister talked about the pay-as-you-go nature of national insurance contributions. I think that most of us, as Members of Parliament, already understand that there is no national insurance pot and that national insurance is, in effect, a distinct version of general taxation.

[Drew Hendry]

My hon. Friend is making a point about the state pension and the mechanics that have been described. However, this situation—where there is no specific pot—is the same in other countries, such as Australia and Canada, which do allow early access to the state pension. There is no difference in the mechanism for it, or indeed the principle behind it; they have just applied the compassion that is missing in this situation. Does my hon. Friend not agree?

--- Later in debate ---

[Dave Doogan]

I agree entirely. A narrative has been advanced this afternoon that, because this does not happen, it cannot happen. But, of course, if we want to make it happen, it can happen. As my hon. Friend points out, that is the case in other jurisdictions that have more cognisance of, and respect for, not just the fiscal elements, but the social contract that exists between society, individuals and the Government that seek to represent them.

I think the point the Minister made in her summing up was that it has never been possible to draw down a state pension early. Well, I think we know that too. What we are seeking to debate here is that that is not a cogent or sustainable position and that the Government should therefore introduce legislation that makes it possible—in very distinct and challenging circumstances —to draw down that state pension early.

Of the range of reasons or excuses for not doing what has been proposed, I would suggest that “introducing complexity to the system” will fall on fairly stony ground with people who have been diagnosed with a terminal illness. I am sure they would imagine that a bureaucracy the like of which the UK has at its command could sufficiently marshal the resources to tackle the complexity of a very distinct change to the state pension regime to allow them the dignity they sorely deserve.

The benefits system was also talked about a lot this afternoon. Well, again, a bit like private pensions, that issue is distinct from this one. Those state benefits—whether personal independence payments or employment and support allowance—are a function of the person’s or underlying health, whether or not they have been diagnosed with a terminal illness. As every hon. and right hon. Member can attest, many case studies show that those lumbering regimes take a long time—too long—to come to fruition, and they do not recognise the fact that, whether there is a pot there or not, those people have substantively contributed to a system that, in their time of need, has abandoned them. I respectfully suggest to the Minister that she and the Government really should think again.

Question put and agreed to. 

Resolved, 

That this House has considered early access to pensions for people with a terminal illness.