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State Pension top up - Class 3A voluntary National Insurance Contributions explained

In October 2015, the government will be introducing the Class 3A voluntary National Insurance Contributions (NICs), which will be available to purchase for a period of 18 months by those who have an entitlement to State Pension and have reached or will be reaching State Pension age by 5 April 2016. The aim is to allow pensioners to boost their retirement savings and will be particularly beneficial to women who took a break from work to have children as well as the self-employed.

How will it work?

For a limited time only, individuals will be able to purchase from £1 to £25 a week of additional State Pension in exchange for a one-off lump sum. The lump sum will vary depending on age, but the rates available will be generous. For example, a 65 year old will pay £890 for each additional £1 a week, which equates to an annuity rate of 5.84%, whilst a 75 year old will pay £674, equating to an annuity rate of 7.71%.

With interest rates remaining historically low, a product like this with built-in inflation is attractive for those looking to make their retirement savings go further. The Class 3A voluntary NICs will also be inheritable on death, which means a surviving spouse will be entitled to at least 50% of the additional pension. It is also important to note that it will be taxable and it will be taken into account in any assessment of income related means tested benefits, including pension credit, housing benefit and assistance with council tax.

To find out more, visit, which includes a personal calculator to help people work out the contribution needed to increase their pension by a weekly amount. There is also a dedicated telephone helpline facility available on 0845 600 4270 or 0345 600 4270 from mobile lines.

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