Only people with an income of less than 150% of the minimum wage will be eligible for compensation because of the rise in the state pension age, the government has confirmed.

This year, the pension age rises to 65 plus one month, leaving thousands of people on early retirement schemes with a month’s income shortfall. Most early retirement systems stop paying out at 65.

However, the government is setting up a bridging loan system for all people caught by the pension gap, junior social affairs minister Jetta Klijnsma told parliament in a briefing.

The state pension age is going up in stages and will reach 67 by 2023.

Klijnsma expects 11,000 people will this year qualify for compensation because their income is less than around €2,200 per month.

A group of people on early retirement schemes are threatening the government with legal action over its plans to increase the state pension age.

They argue their early retirement packages were based on a state pension age of 65, but now ministers plan to increase that by one or two months a year, they will be left without income for several months.