Topping up your state pension

increase

To gain an extra £5 per wk I have to pay in a lump of £4235 at 67, I'd have to live for at least another 16 yrs to gain anything, it does seem an awful lot and will an extra £5 be worth losing that money now?

An interesting find though Jane thankyou

Tanith I should have added that I am not a financial advisor, my post didn't constitute financial advice and it wouldn't be for everyone but might interest some!
MrA and I try to keep up with what's going on and read the financial pages, but that had escaped our notice.

Obviously you have to do the sums and estimate how long you're going to live, and whether you have any capital that you can lock away for ever. It's like buying an annuity - and as it's indexed-linked and (hopefully) Government-guaranteed, it seems quite a good rate.

Thanks Jane, I thought it worth investigating , I'm not very savvy when it comes to pensions and such just wish we all knew how long we've got

A useful link; one of my friends did this.

However, when I bought an annuity I worked out I would have to live to 80 to get my money back.
If I don't do that the company who sold it to me have gained.
I would rather have had the cash to do with as I wished.

I would have to pay £8.900 to get an extra £10 per week not worth the bother even though I only get a miserly % from my bank at least it is there if I want it "right now".

Also, depending on other sources of income , the extra might be taxable

Well yes Grannytwice it would be taxable, if income was above the tax-free allowance, but so would interest on a savings account be, unless it was in an ISA.
Glamma An extra £520 per year on an outlay of £8900 works out at 5.8%.
Most indexed-linked annuities pay a lot less than that, typically around 3.5% I think.

It has gone up so much. Six years ago my husband bought 5 missing years for less than £2000.

I still feel slightly aggrieved that because I retired pre 2010 I needed 39 years NI payments and only scraped together 37 so lost out on the basic pension.
Oh I know ( before you tell me) that I can pay for class 3a ni credits from October 2015 but as others have said paying 1000s for extra state pension which I may not live long enough to get back (if I had 1000s kicking aound doing nothing) - sooner have my money such as it is in my sticky hand.
any government decision where you are personally affected by a cliff edge cut off can feel unfair - but so if LIFE

Index-linked, janea? Where did you see mention of that?

State pensions are index-linked, at the moment FarNorth.
I made additional contributions to increase my pension, because I didn't have enough qualifying years for a full State pension. The extra bit I paid for is listed separately as 'additional pension' on the annual statement of increase that you get. That bit goes up each year at the same rate as the basic pension does.

I think the country would have to be in an extremely dire state, and the government of the day extremely brave, in the Sir Humphrey Appleby sense of the word, not to increase the State Pension each year.
At the moment it is protected by the triple lock guarantee which means that it goes up by the highest of 3 different indicators, the rate of inflation, average earnings, or 2.5%.
But as this Q&A points out, that is proving costly for the government and no-one knows what will happen after the next election.
citywire.co.uk/money/qanda-what-is-the-state-pension-triple-lock-guarantee/a686253

Yes janea but it's not like an ISA is it? you have to live for a good few years to get your money back

That's right grannytwice, it's like an annuity not an ISA.

but we are all rich - richer than ever according to a twenty something
www.telegraph.co.uk/finance/personalfinance/11432189/Let-the-boomers-prove-they-arent-a-selfish-generation.html
because of the lavish perks and generous state pensionn - so it must be true

Just tried to look at that link, mollie, but got a message saying I had reached my 20 articles a month limit.
Didn't know there was one. Obviously I hadn't reached it any other month.
Have to wait until Sunday to look at it.

To quote a previous example £8,900 will buy £10.00 a week in extra pension. That is £520 a year, a return of 5.8%, which is a lot better than you will get putting the money into any building society or bank savings account.

In addition the money you get will rise every year when the pension rises so if the state pension increases by 2% the following April the return you get will go up from £10.00 to £10.20. If the same happens again it will go up from £10.20 to £10.40 under the usual pattern of compound interest and so on and on.

I appreciate that the capital is gone for ever as with an annuity, which if the capital is necessary to you, you cannot afford to do, but if you are relatively young retiree and are reasonably optimistic about your longevity then it could be a very good investment.

I was made redundant into early retirement in my 50s and used most of my redundancy money to buy extra pensionable years. I have now been retired over 15 years and if I live to be as old as many of my family I could live into my 90s. Compound interest means the return I am getting on that money is already more than 10% per year and will continue to rise.