Should you buy more pension?

Now that the terms of the government’s state pension top-up offer have been announced, the Daily Telegraph asked whether it represented a good deal.

Each £1 of extra pension income will cost £890 at age 65, and like the state pension itself the income will be inflation proof since it will rise in line with the Consumer Price Index. It will also deliver, in most cases, a 50% Dependants Benefit too. The effective annuity rate that this new (Class 3A) opportunity delivers represents a return about double what you could get in the open market, so it will be attractive to some. If you are single, the pension dies with you, so the deal will not be so attractive to single people or those in poor health, for whom putting cash into an ISA may be better, say experts.

The whole issue of “choice in retirement” is one with such important consequences that advice is likely to pay dividends.