Following the closure of NS&I Pensioner Bonds after they gathered a record £13 billion from investors, the Telegraph featured what could be an even better offer from the government.
This is the offer of state pension top-ups for those who reached or will reach state pension age before April 2017. The offer opens in the autumn and the Telegraph says the return on the lump sum contributions to buy extra pension for life will be almost double what you could get in the market. For example, a 65-year old will get an annual return of 5.8%. Effectively, it’s an index-linked annuity with a surviving spouse getting half the income for the rest of their lives too. What you pay for each £1 of extra weekly income depends on your age – at 65, the maximum top-up of £25 per week will cost just over £22,000.
Anyone who lives longer than the average life expectancy for their age will get a great return from this scheme. And it’s even better for qualifying individuals who have a much younger spouse because they will get the residual income for life. It’s certainly worth considering.