Last Chance To Buy A Cheaper State Pension

Posted on: 19 March 2009 by Gareth Hargreaves

Women who took career breaks and want to top up their state pension should do so now or face a 50% increase in prices.

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The cost of buying credits to replace missing years of National Insurance contributions will rocket from £421.20 per year to £626.60 from 6th April.

Women with fewer than 10 qualifying years NI do not receive any basic state pension in their own right.

A woman with nine qualifying years who buys back just one year will be entitled to £23.58 a week (around a quarter of the full basic state pension).

To get this income from a personal pension, a 60-year old woman would have to invest £35,240, according to insurer Standard Life.

Before taking any decision, you need to establish how much state pension you're entitled to.

You can get a state pension forecast by completing form BR19 at the Pension Service website or contacting the State Pension Forecasting Team Enquiry on 0845 300 0168.

For many people, topping up their state pension won't be worthwhile.

Those with only a few years' NI contributions may not have time to buy the minimum ten years if they're retiring shortly. This is because you can buy only an additional six years at one time and then can top this up with one missing year each year after that.

Women retiring on or before 5th April, 2010, should top up only if they will have fewer than 39 qualifying years (including credits for bringing up children or caring). Men need 44 years to get a full pension until then.

Those retiring after 6th April, 2010, need 30 qualifying years to receive a full pension, so if you can achieve this by the time you retire, don't bother to top up.

The price of topping up the state pension is increasing to reflect these more generous rules introduced for those retiring after 6th April, 2010. Each year a woman buys back will count for a bigger slice of their state pension than before the changes.

John Lawson, from Standard Life, says “Women who want to top up their state pension need to act quickly. The Government has realised the deal is a giveaway.”

Seven in 10 women don't qualify for a full state pension compared with just 15% of men.

How’s your pension fairing?

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