Pensions Minister Steve Webb has announced plans to allow pensioners to be able to top up their State Pension by up to £25 a week, even if they have already retired.
Pensioners and those reaching State Pension age before 6th April 2016 can top up their benefits, through a new Class 3A Voluntary National Insurance Contribution.
Those eligible to make the contributions will be able to do so for 18 months from October 2015 onwards. There will be a cooling-off period of 90 days.
For a 65-year-old to get an extra £1 a week, they will need to pay £860 in voluntary contributions and the rates are the same for men and women. The maximum top up for a 65 year old is £22,250, which would provide them with an extra annual gross income of £1,300 for life.
The contribution decreases with age, so for a 70 year old the rate per extra £1 a week reduces to £779, and by age 75 it is down to £674.
It’s worth noting that your State Pension will actually increase each year, in line with the Consumer Prices Index measurement of inflation, for the rest of your life.
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