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Can I top up my state pension?

By Paul Davies

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Can I top up my state pension?

Up until April 2017 you can top up your state pension. Which? outlines the pros and cons of adding to your state pension.

This initiative allows people who reach the state pension age before April 2016 to top up their pension. This includes those who are already drawing the state pension. Which? explains how you can add £1,300 per year to your state pension.

How can I top up my state pension?

The government is allowing retirees to buy extra state pension by paying so-called Class 3A voluntary National Insurance contributions between October 2015 and April 2017.

This will help people reaching state pension age before 6 April 2016 who will not receive the new single-tier state pension. 

Some retirees will be better off under the new system (eg some women and self-employed workers) and the top-up will allow pensioners retiring before that date, and who may feel that they are missing out, a chance to build up a higher future state pension income.

Among those who probably won’t achieve the equivalent of the full level of new state pension of £155.65 per week, and will be interested in the top-ups, are people who’ve had career breaks and not paid NI for the full number of years, and women bringing up children who’ve missed out on the additional state pension.

For more: Your state pension and benefits - the comprehensive Which? guide.

How much will it cost?

How much you’ll pay for the extra state pension will depend on your age, with the cost falling as your age increases and your life expectancy falls. The maximum extra pension you can buy is £25 per week, or £1,300 per year, so:

  • At age 65, increasing your pension by £1 per week will cost £890, or £22,250 for an extra £25 per week.
  • At 70, the cost is £779 for an extra £1 per week, or £19,475 for £25 per week.
  • At 75, the cost is £674 for an extra £1 per week, or £16,850 for £25 per week.
  • At 80, the cost is £544 for an extra £1 per week, or £13,600 for £25 per week.

Is it worth it?

The cost of buying extra state pension rights has been set at about half the cost of buying a joint-life annuity at present, so is a decent deal on that basis. If you are currently 65, and live beyond 80, you’ll be getting a good deal, given reasonably high levels of inflation.

There are several groups to whom the offer will particularly appeal – women who did not manage to accrue rights to the additional state pension (ASP) while working, the self-employed who were excluded from the ASP, and low earners who lost out because the ASP was earnings-related.

People who are ill or may have a limited life expectancy will probably not benefit from this arrangement. If you are single, and don’t need provision for a partner, the partner’s pension rights that come with the state pension will be of little benefit. 

How do I go about arranging this?

You can make a purchase, either online or by telephone, using a one-off direct debit, online banking transfer or by sending a cheque.

Your weekly state pension will increase with immediate effect, although there’s a 90-day ‘cooling-off’ period, during which you can change your mind and get your money refunded – less any payments you've already received. Find out more via – topping up your state pension.

  • Last updated: December 2016
  • Updated by: Paul Davies

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