State pension top-up proves a flop

The government’s state pension top-up scheme attracted just 5% of its anticipated take-up over an 18-month window, figures  from the Office for Budget Responsibility (OBR) show.

It offered men aged 65 or over and women aged 63  or over the chance to increase their state pension entitlement by up to £25 a week.

Figures showed around 4,000 people took advantage of the scheme in the first 6 months  following its launch in October 2015, rising to around 13,000 by the time it closed in April 2017.

The original measure expected final take-up to be around 265,000, with £870 million of class 3A national insurance contributions (NICs) prompting higher state pension payouts over the long term.

Even though the average payment of around £17,000 was much higher than the £3,200 assumed in the costing, only £225 million was received in NICs payments.

In its supplementary forecast information released in November 2017, the OBR said  it “will carry out a fuller evaluation of the reasons for this large shortfall next year [2018]”.

Why was it unpopular?

It’s likely the up-front costs involved played a significant role in its lack of popularity.

For example , to receive an extra £1 a week (or £52 a year) for life would have cost a 65-year-old a £890 lump sum, while to get an additional £5 a week (£260 a year) would have cost £4,450 up front.

To receive the maximum extra £25 a week (£1,300 a year) of state pension, someone aged 65 would have needed to stump up a £22,250 lump sum.

What am I entitled to?

You can check your state pension entitlement at any time on the government’s website. To do this, you will need your government gateway user ID and password to login.

This will bring up a record of your national insurance contributions (NICs) relating to each financial year in your working life.

Alternatively, you can request a state pension statement over the phone by calling the government’s future pension hotline on 0345 3000 168.

Can I still increase my state pension?

You can pay class 3 NICs to fill gaps in your contributions record, which determines your eligibility for certain benefits including the state pension.

Faster payments are accepted online or over the phone, or you can pay at your bank/building society, the post office or via cheque.

We can discuss your state pension entitlement.