More than 12 million pensioners will be able to boost their state pension by up to around £25 a week under plans announced by the Government. The offer applies to all existing pensioners and anyone who reaches state pension age before the new higher ‘single tier’ state pension, worth about £144 a week, begins on April 6, 2016.
The new pension will be up to £40 a week more than the basic pension is now and this deal will allow those born the wrong side of the line to boost their pension towards that level. Men born before April 6, 1951 and women born before April 6, 1953 will not get the new pension but will be able to buy the additional pension in units of £1 a week up to the maximum.
Should you defer your state pension?
How much will it cost?
The Government has not announced how much people will have to pay, but independent experts reckon that at age 65 it will be about £1,000 for every £1 a week bought - around £25,000 to £280,000 to buy the full £25 a week extra. Someone who lives an average lifespan will get their money back and the amount will fall the older you are. But it will not vary by health, sex or postcode – all of which affect how long you will live.
It will be increased each year in line with inflation and at least half of it can be inherited by a spouse. The offer will be open from October 2015 but people will have to act quickly - it is expected to close within a year or two.
The Government says about seven million pensioners have enough savings to buy at least some extra pension but expects only ‘a small proportion’ will do so.
Are you one of the women disadvantaged by the changes to state pension age?
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