State Pension Top Up Starts Today

State Pension Top Up Starts Today.

The ability for pensioners to voluntarily increase their state pension starts today. Previously announced in the Budget pensioners are now able to increase their state pension between £1 and £25 extra per week.

To do this you must pay a lump sum before 5 April 2017 and this is available now.

Eligibility

• men born before 6 April 1951
• women born before 6 April 1953

Why would you do this?

The state pension is a guaranteed income for life with also the ability to pass benefits on to your spouse in the event of premature death. The equivalent annuity rate is around 6% and given that the state pension is backed by the British Government, it is perhaps the most secure annuity you could ever buy. That said, the state pension top-up is really for those who already have accrued a full state pension.

Many people have shortfalls in their national insurance record and may wish to consider the state pension top up. This is where careful consideration should be made. If you have a shortfall in your national insurance record you should first consider using the usual "voluntary national insurance contributions" route before considering this separate state pension top up option.

Handy calculator

The Department for Work and Pensions have produced some very simple to use calculators to help you in your decision as to whether would like to stop up your state pension.

Link to state pension top-up pages: https://www.gov.uk/statepensiontopup

Comment

If you are a cautious investor and you believe you have a reasonable life expectancy then the state pension top-up may represent value for money when planning your retirement income.