Pension trick could see Britons rake in HUNDREDS of pounds EVERY MONTH if done by April 5
BRITONS at retirement age have been urged to boost state pension income through a valuable government offer before it is withdrawn for good on April 5.
How the state pension top-up scheme works
The top-up scheme allows anyone who missed out on the new state pension introduced last year to exchange a lump sum of cash for generous index-linked income for life.
Compared with rates on annuities - retirement products that work in a similar way - payouts are two or three times higher, according to former pension minister and Royal London policy director Steve Webb.
Anyone who reached state pension age before April 6 2016 now has just three weeks to pay Class 3A National Insurance and receive the extra income, which also provides a 50 per cent survivors payout when the pensioner dies.
The scheme means a 65-year-old woman could exchange £8,900 for £520 per year, which would rise in line with CPI inflation each year, calculations by Mr Webb showed.
Pensioners have just 3 weeks to top up
What does a pension annuity mean?
By comparison, the same woman buying an index-linked annuity, with a 50 per cent pension for her husband if she were to die first, would get an annual income of just £195 per year.
Even without the inflation protection, the payout would be just £347 per year.
The cost of buying additional state pension under the state pension top-up scheme depends on your age and on how much additional pension you want to buy, but the maximum available is an extra £25 per week or £1,300 a year.
Mr Webb said the scheme is particularly attractive to people with small pension or savings pots.
It's also a good option for women and those in good health on the basis that they will tend to live longer.
He said: “Compared with annuity rates available in the market, the state pension top-up scheme offers very good value. Anyone who was already receiving a state pension by 5th April 2016 and who would like to boost their regular income should seriously consider this scheme before it lapses in a few weeks’ time.”