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'Window of opportunity' to top up your state second pension

Retired people and those reaching retirement age before April 2016 have a short period in which they can add to their pension.

Retired people and those reaching retirement age before April 2016, with broken career records, are being urged to take advantage of a "window of opportunity" to top up their state pension.

The autumn statement announced a new class of voluntary national insurance contributions (NICs) for retirees and those close to retirement who have not worked enough years to be eligible for the state second pension (an earnings-related top-up that will be abolished in April 2016). The new NICs will be introduced in October 2015 and run for a limited time.

Tom McPhail, head of pensions at Hargreaves Lansdown, says: "This offers a short window of opportunity for those who qualify, and who have a broken record of contributions with less than the 35-year entitlement you need to qualify for a basic state pension and additional state second pension."

Ros Altmann, pensions expert, adds: "It is definitely worth taking advantage of an extra state pension which, unlike putting money into a private pension, will give you inflation linking and spouse cover. If you have a partner and die early, the state pension will continue for them under the pre-2016 rules."

The current basic state pension is £110.15 a week and the maximum you can claim in state second pension for 2013/14 is £163 a week on top of your basic state pension – a total of £273.15.

You can already top up your basic state pension with voluntary NICs, which offers a "fantastically generous deal", adds McPhail.

He calculates that if you are one year short of receiving the full basic state pension you could pay £705 for a year's NICs, which will buy you £190 a year in extra basic state pension for the rest of your life.

Source:  Guardian

Sam: 10th Dec 2013 16:45:00

 

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