Britons could soon access their state pension early to buy a house under new proposals

The ideas on the table range from drawing down private pension savings to accessing future state pension entitlements decades before retirement.

Backers say such schemes could ease the housing affordability crisis for younger workers struggling to save enough, though experts warn it could leave people short later in life.

Several financial institutions have already approached the Treasury with proposals, while MPs are working alongside think tanks to design alternative options.

Ministers are said to be open to exploring these ideas, though pension specialists remain divided about the long-term impact on retirement incomes.

Andrew Lewin, who represents Welwyn Hatfield, has teamed up with the Social Market Foundation to propose a "Citizen’s Advance" scheme. This would allow workers with at least ten years of employment history to receive 12 months’ worth of state pension payments upfront as a lump sum.

In return, beneficiaries would postpone their retirement pension by an equivalent period. The current annual state pension amounts to £11,973, with projections indicating a 4.7 per cent increase from April.

Mr Lewin said: "I think the Citizens Advance could have a transformative impact on people who need extra help to get on the housing ladder, or might want to spend a few months off work to support a new young family."

The proposal targets those struggling to accumulate deposits whilst managing living costs.

Investment firm Schroders has presented ministers with plans enabling workers to withdraw private pension contributions for property purchases.

James Barham, the company's Solutions executive chairman, revealed at a recent industry gathering that officials had responded positively to their proposals.

Research organisation Nest Insight has launched a twelve-month investigation examining potential connections between retirement savings and housing accessibility. The study involves both numerical and interview-based research to establish evidence for workable solutions.

"This could mean allowing people to put some of their own pension saving towards buying a home," the organisation stated.

The Treasury has not yet responded to requests for clarification on these initiatives. Various financial services companies have submitted similar suggestions throughout the year, reflecting growing industry interest in addressing deposit barriers through pension flexibility.

Ronan O'Riordan from Schroders believes early pension access could enhance long-term retirement planning engagement.

He explained: "The word pension to many is something really far away what we're trying to do is make a system where if you're able to save, say 8 per cent of your salary and then save a little bit more, you can access that early so you can have your deposit for your first house much quicker."

The scheme could generate increased discussions amongst colleagues about additional savings contributions. "One of the benefits of that is that it could increase conversations among peers around their extra savings, and getting them engaged early could have a compounding effect [on pension savings]," Mr O'Riordan stated.

Supporters argue these measures would assist younger workers facing deposit challenges whilst potentially improving overall retirement preparation through earlier engagement with pension planning.

Former pensions minister Steve Webb expressed reservations about utilising state pension advances for property purchases. He questioned the arbitrary nature of the £12,000 figure, asking: "Why not £6,000 or £20,000?"

Mr Webb highlighted potential hardship risks, stating: "So, you're really saying that the price for helping young people today is that they increase the risk of living on the breadline for an extra year in their late sixties."

He doubted Treasury approval, noting: "I doubt the Treasury would be very keen on paying £12,000 to say 100,000 young people a year which would be over £1bn, and I can't see that happening."

Adam Cole from Quilter warned: "Many people are not putting away nearly enough to secure a comfortable retirement, and allowing early access to pension funds, be that from private pots or future state pension entitlements, could undermine long-term financial resilience."