More than seven million British people are being offered the opportunity to top up their state pensions. Men who are over the age of 65 and women over the age of 63 can get around £25 a week extra on their state pension, in return for a one off payment.
The exact amount they will have to pay depends on factors such as their age- the older they get, the lower the cost. The offer is currently open to existing pensioners and those who will reach the state pension age by April 2016. After that date, a single tier pension will begin.
Currently, basic state pension is worth up to £115.95. The new flat rate pension will be worth up to £155 a week for people that qualify. The top up scheme will be known as Class 3A contributions and will provide pensioners with an income that will rise with inflation. Any spouses or civil partners will be able to inherit at least half of the income once their partner dies.
Currently, around seven million people are of pensionable age and are therefore eligible to take part. However, the DWP has said that the scheme won’t be suitable for everyone and expects around 265,000 people to take up the offer. A spokesperson said:
“It won’t be right for everybody and it’s important to seek guidance or advice to check if it’s the right option for you. But it could be particularly attractive for those who haven’t had the chance to build significant amounts of state pension, particularly many women and people who have been self-employed.”
The maximum amount of extra income possible will be £1,300 a year or £25 a week. Those wishing to apply have 18 months to do so.