Only 13,000 people took advantage of the government’s state pension top-up scheme which ran for 18 months between October 2015 and April 2017. Figures released by the Office for Budget Responsibility (OBR) show that less than 5% of the people expected to take up the opportunity (265,000) did so, leaving many to judge former Chancellor George Osborne’s plan a failure.

The scheme offered men aged 65 or over and women aged 63 or over the chance to increase their state pension entitlement by up to £25 a week. It was estimated that the take-up would generate additional Class A National Insurance Contributions (NICs) of around £870m. However, even though the average payment of around £17,000 was far higher than the £3,200 assumed in the costings, the final total was only £225m.

In its supplementary forecast information released in November 2017, the OBR said it “will carry out a fuller evaluation of the reasons for this large shortfall next year [2018]”.

The up-front costs involved for eligible individuals most likely played a significant role in its lack of popularity. For example, to receive an extra £1 a week (or £52 a year) for life would have cost a 65-year-old an £890 lump sum, while to get an additional £5 a week (£260 a year) would have cost £4,450 up front.

To receive the maximum extra £25 a week (£1,300 a year) of state pension, someone aged 65 would have needed to find a £22,250 lump sum.

Despite the apparently generous opportunity, commentators have concluded that only the cash rich were in a position to take advantage of the scheme and that, for this reason alone, it failed to capture the attention of the majority of those eligible.

Get in touch

To discuss your own pension and retirement arrangements, give one of our advisers a call on 01483 205890