A fresh initiative enables people who attain the state pension age before April 2016, to increase their pension. Including people who currently draw their state pension. The Government is permitting retirees to purchase additional state pension through ‘Class 3A’ voluntary NI contributions between Oct 2015 and Apr 2017. This helps individuals attaining state pension age prior to Apr 2016 who won’t get the latest flat-rate pension.
Some may be better off within the new plan (e.g. females and self-employed people) the top-up allows pensioners retiring prior to date, and who feel they are losing out, an opportunity to secure a greater state pension. Some of those who possibly won’t obtain the same as the flat-rate pension of approximately £151, are individuals who have had career breaks and therefore not paid the full required years of NI, and people raising children who have missed out on the extra state pension.
The amount you will pay for the additional state pension is determined by how old you are, the older you are the lower the cost. The most additional pension you can purchase is £25 pw, thus:
At 65 boosting your pension by £1 pw costs £890, or £22,250 for an additional £25 pw; this drops to £544 for an extra £1pw and £13,600 for £25pw for an 80 year old.
The additional pension purchase can be carried out online or on the phone, via a direct debit, bank transfer or cheque. The state pension will immediately increase, however you do get a 90 day ‘cooling-off’ period, and you can get your money back if you change your mind during this time, minus any benefit you have received.