If you are already receiving or have deferred taking a State Pension, or will reach State Pension age before 6 April 2016, you may benefit from an opportunity to top up your State Pension by paying Class 3A National Insurance contributions.
This could be of particular interest to women and the self-employed, two of the groups who have traditionally not done as well out of the State Pension.
The Government estimates that around 265,000 people may take up the offer to pay additional contributions to boost their pension.
The Government estimates that around 265,000 people may take up the offer to pay additional contributions to boost their pension.
The top ups won’t be available until 12 October 2015 and you will only be able to buy them until 1 April 2017. The maximum additional state pension you will receive by topping up is £25 per week, £1,300 per annum.
You will be able to choose how much you want to top up your pension by between £1 and £25 per week. How much you will need to pay in contributions will depend on how much extra pension you want and how old you are when to make the contribution.
The Government has provided a handy calculator to show how much you will need to contribute. Visit https://www.gov.uk/state-pension-topup and click on start now.
As an example someone who is 68 in October 2015 would need to pay £4,135 to receive an additional £260 per annum. This would be payable until death and a surviving spouse or civil partner will be entitled to at least 50% of the additional State Pension.
The length of time required to recoup your investment in additional contributions depends upon your age when you pay the contributions. At age 65 it is around seventeen years; at age 70 it is fifteen years; and at age 80 ten years will be needed, but don’t forget the inheritance.
You can view a table of how much you would need to pay at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/298208/state-pension-top-up-pricing-table.csv/preview
