The new Class 3A state pension top-up scheme is available to everyone who is already entitled to state pension or will be before 6 April 2016.
That is all men born before 6 April 1951 and all women born before 6 April 1953. For many pensioners (but not all) this can represent a good deal.
The deal opened on 12 October and will last until 5 April 2017. You can buy the extra pension at once or in stages.
If you change your mind you can get your money back and give up the extra pension within 90 days of paying.
The scheme is called State Pension Top-up (technically voluntary Class 3A National Insurance contributions) and advisers can check what it would cost their clients and apply on the official gov.uk website or by calling 0345 600 4270.
Your client will need proof of their identity and their national insurance number, if possible.
The top-up can be bought in units of £1 a week up to a maximum of £25 a week, or £1,300 a year. The purchase cost depends on age.
Malcolm McLean, senior consultant at Barnett Waddingham, says that at age 65, an extra pound of pension costs £890, so for the full £25 a week you would have to shell out £22,250.
At the age of 75, he says the cost is £779 or £16,850 for the full £25 a week.
The cost may seem high, but Mr McLean says it is worth noting that the extra pension is index-linked (as measured by the CPI) and at least half can be inherited by a spouse or civil partner.
The amount depends on the age and sex of the one who dies first, he notes, and in some cases the survivor can inherit all of the extra pension.
Mr McLean says: “It would normally be a much better deal than, for example, buying an annuity on the insurance market. An annuity/pension for life of £1,300 a year at age 65 would cost a healthy single person around £37,000.
“A married person who wanted their widow or widower to have 50 per cent of the annuity on their death would have to pay around £45,000. So, in comparison, £1,300 a year for £22,250 must represent excellent value.”
