State Pension Top Up

[lardhelmet]

Out of curiosity, I clicked on to the government advert. that is appearing on my page today, to see what it was about. It seems that in order to increase my pension by £10 a week, I have to send them £8,900 when I'm 65.

So, if I need an extra £10 per week, why would I have £8,900 in the bank?

[lardhelmet]

I'm not planning to hang around that long.

[Old_Geezer]

Tilly, when you say 79.5 had you factored in the interest over that tome or just wanting to know when you got the investment back ?

It doesn't look a great opportunity to me, but the question is, is there anything better out there ? No one is playing fair these days with the interest rate near ground level.

[buildersmate]

Surely the best way to deal with this is to use one of the calculators to estimate how long one has to live for based on average rates of return of perhaps 5%, then compare that to one's own circumstances.
The average life expectancy currently is 84 for women and 82 for men. Look at one's family history of length of life, take a view on one's known health, then make a decision.
Government actuaries obviously advise on what investment pensioners to be must make in order to get X extra on their pension, one will never be sure that one will gain, but an individual has a far better idea than any Government official on whether this is a good bet or not.

[Tilly2]

OG, i didn't factor in the interest. I didn't think about that.

My calculations were
£25.00 X 52 = £1300

£23350/£1300 = 17.9.........almost 18 years. I added the 18 years to my age now.
So if I invest £23350, I will have got all my money back by the time I reach 80. Will it be different with interest? (Daft question, I know but I don't know how to work it out)

[Svejk]

Also, £25 might not buy a bag of Werther's Originals in 20 years, tilly.

[Svejk]

you would more than double your money with 20 years interest payments, tilly.

[factor-fiction]

It's worth reading the fine detail.
The gov.uk site says that the amounts quoted will be increased in line with inflation
"The State Pension top up has been set at an actuarially fair rate that ensures
that both individual contributors and the taxpayer get a fair deal. The rates set
out below show the contribution needed for £1 per week of additional State
Pension, according to age. The rates are the same for males and females. As
an illustration, the contribution required for an extra £1 pension per week for a person aged 65 is £890. This means that for £4,450, the individual couldreceive an additional £260 per year for life, increased in line with prices and inheritable on death in the same way as existing additional State Pension:with a minimum of 50% for the surviving spouse or civil partner. For a 70 year old the rate reduces to £779 and at age 75 the rate is £674"

[jourdain2]

I'm 65, I get £103 a week - don't understand how it all works, it seems to be a 2-tier system (scratches head...).

[factor-fiction]

Basically, inflation is a red herring. The terms of the deal are all at present day prices..
It's a fairly attractive offer compared to current annuity rates but it's up to each individual based on their current spare cash, future needs and estimated life expectancy to work out whether it's a good deal for them.
I suppose the government can't win with this: make it too generous and it'll be accused of a pre-election bribe; make it to unattractive and it'll be told it's out of touch

[Tilly2]

I'm scratching my head too, jourdain. I think I might have to consult a financial adviser.

Svejk, are you saying don't do it because I could get a better return if I invested £23350 elsewhere?

[Svejk]

I didn't know it was linked to inflation, tilly.

[Tilly2]

Neither did I, Svejk. Thank you anyway. (and to factor....again)

[Svejk]

My old mate who hasn't worked in the 20 years I've known him gets £185pw+rent paid. If a different government got in mightn't they make up the pensions of people who don't 'top-up' with pension credit or something similar?

[factor-fiction]

pension credit is due to go i believe when the new higher universal pension comes in - but whether things like housing benefit will distort things I don't know

[grumpy01]

I would assume Jourdain that you have missed some years of contributions.

[EDDIE51]

I will be 65 on 23/01/2016 so what pension can I expect?
Currently I get pension credit for myself and the wife. I was made redundant in 2009 after working since I was 17.
As I see it I miss the new higher pension by 11 or 12 weeks. No cash to invest to get a higher pension.

[BRIGHT SPARK]

I think the state pension will be means tested within a few years, so anyone with a house and savings will get nowt.

[lardhelmet]

Well that's something to look forward to Bright Spark.

[SirOracle]

Do you really think that UKIP will be in charge then !!??

[factor-fiction]

The latest change seems to me to be going in the opposite direction, bright spark, but there does seem to be a feeling in all political parties that the better off shouldn't get things like winter fuel allowance and free bus passes, but it depends where the line is drawn- millionaires or those with earnings of say £20000 a year