State Pension. Is it worth paying a lump sum for extra cash

kah22

I'm 68 in June and due to a chronic childhood/lifelong medical condition so while I've had jobs here and there I was never in them long enough to built up a good National Insurance record. My main income over the years has been DLA, various sickness benefits and income support of one sort or another.

Today I got a letter about my pension credit with a leaflet inside, part of which explained how I could increase this by up to £25 per week. Basically it was saying that for a lump sum you could increase your weekly pension e.g for £8,470 when you’re 68 you would get an extra £10 week. Increase that to £12,405 and you get an extra £15 per week when you’re 68 and £20,675 for £25. (See calculator)

While I couldn't stretch to £20,000 plus I do think that with the help of my local Credit Union and some small savings I have I could raise the £8,470 which would give me that extra £10 week

My calculations would show that it would take a little over 16 years to draw even.

The point is I don't know how to work out if this is a good deal or not. There has to be downsides as well as upsides but quite honestly I don't know what the upsides are, the payback time would seem to be a major downside. I'd also be paying interest to my CU

I really would appreciate your view on this issue

Kevin

xylophone

Is your only income now state pension topped up by guaranteed pension credit/pension savings credit?

kah22

No, I receive DLA and housing benefit. I live in Northern Ireland and DLA will be phased out in a few months time. Age will rule me out of having to apply for PIP

[Deleted User]

I bought in for the full amount, got it on my 68 birthday. I am healthy and wanted something similar to a small annuity, to give me a basic secure steady income stream for the rest of my life. I took into account my family history of female lifespan and my lifestyle and there is a good chance of my living for the time it would take to recover the full amount paid. If I had any history of ill health and if the family genetics were not good then I would not have done it, not even if I were borderline. I certainly would not have borrowed any money to buy in

kah22

Thankfully my condition has changed dramatically over the past 10-15 years. While I don't want to go into detals the condition should not affect my lifespan

I'm single, have no children and physically quite robust. Women do intend to live longer than men? Any idea of the average lifespan of men?

I acknowledge your point on borrowing. CU interest rates are hard to work out. -1.5 percent per month on the unpaid balance with a little of the payback been put into savings. If I did go down the road of borrowing it would probably be £4,000. Debt is wiped on members death

Kevin

Alter_ego

Surely pension credit already tops up your State pension? If so an increase in SP would reduce Pension credit.

LXdaddy

kah22 wrote: »

Women do intend to live longer than men?

{pedant alert}
I'm sure we all intend to live longer than others, but statistically, women do tend to live longer than men.
{/pedant}