Andy Burnham has been urged to allow affluent state pensioners born after 1961 to voluntarily give up their state pension payments for a minimum of three years in exchange for an honour such as an OBE. The proposal, outlined in a new report by the left-wing thinktank Compass, which is backed by his ally Neal Lawson, has been put forward to the Labour government.
The scheme, dubbed "pensions sacrifice OBE," would enable well-off retirees to forgo their state pension in return for an honour from the Royal Family. It would not apply retrospectively, meaning if introduced next year at the earliest, it would only be available to wealthier individuals born after 1961.
State pension age changes
The state pension age is currently rising from 66 to 67. This phased increase began on 6 April 2026 and will be fully rolled out by 6 April 2028, affecting anyone born on or after 6 April 1960.
Compass also proposes that members of the House of Lords (or its replacement) should be prohibited from serving in the Government, creating a partial separation of Executive and Legislative functions, which is common in other countries' constitutions. This would allow the second chamber to focus purely on scrutiny.
Lords reform proposals
The report states: "Currently there are no hard restrictions on appointments by the Prime Minister to the House of Lords." It highlights that unsustainable appointments over the last 25 years have seen the chamber's size grow from roughly equal to the 650-member House of Commons to over 800 members. Prime Ministers have appointed disproportionately to their own side, causing successors to play catch up, while fewer genuinely independent 'Crossbench' members are being appointed.
The report adds: "This patronage system would look absurd in any other democracy, and helps bring UK politics into disrepute. Because the Prime Minister controls the system they can unilaterally announce an end to this practice. But to ensure future Prime Ministers don't reverse the change, a more regulated system should be put into statute – with the Removal of Peerages Bill in the recent King's speech providing a possible vehicle."
Blueprint for reform
The cross-party Lord Speaker's Committee on the Size of the House of Lords has provided a potential blueprint, which would ensure a fair division of appointments between parties, improve independent oversight, and reduce the chamber's size to no larger than the Commons.
The report concludes: "Acting immediately on this gross anomaly need in no way undermine commitment to larger-scale longer-term Lords reform in the future."
