Should I pay upwards of £4K to top up my Old Age Pension [OAP] ?

jimi_man

tacpot12 said:

I don't think it is is worth it for you. £4.40 per week is only £228 a year (before tax), and you will pay 20% tax on this amount (assuming you are already recieving at least £3000 from your occupational pensions). So the £228 year becomes £182. Even if you live for 20 years, you will have not have broken even - I have assumed that you would draw down on the £4000 or so that making up the missing years will cost you, and that the investment growth on the this retained capital will allow to increase your drawdown amount in line with inflation.

Each year costs around £750 and adds another (as you put it) £182 a year net. So four years break even point. So I'd say it's definitely worth it. 

p00hsticks

jimi_man said:

tacpot12 said:

I don't think it is is worth it for you. £4.40 per week is only £228 a year (before tax), and you will pay 20% tax on this amount (assuming you are already recieving at least £3000 from your occupational pensions). So the £228 year becomes £182. Even if you live for 20 years, you will have not have broken even - I have assumed that you would draw down on the £4000 or so that making up the missing years will cost you, and that the investment growth on the this retained capital will allow to increase your drawdown amount in line with inflation.

Each year costs around £750 and adds another (as you put it) £182 a year net. So four years break even point. So I'd say it's definitely worth it. 

Especially as the £4.40 figure is well out of date (I think that's what it was when the new State Pension was first introduced in 2016. As other's have pointed out, currently the relevant figures are £5.29 a week or £275 a year (£220 after basic rate tax if applicable).

The cost is now around £800

Silvertabby

wjr4 said:

Silvertabby said:

Yes, not such a good return if I fall under a number 13 bus a year after SPA, but such is the case with all pension savings.

Side note: it isn’t the same as defined contribution pensions. So not ‘all’ pensions. 

OK, but then it would be the nominated beneficiaries who would benefit, not the pensioner!

xylophone

Given the OP's employment history,I'd hazard a guess that  he is likely to have joined up in the late seventies - if  on leaving service he was subsequently employed up to 2016 by the CS,  he'll have a hefty COPE - possibly his forecast at 6/4/16 would have been only  little over the old basic SP.

would it be more beneficial overall for me to pay these costs to increase my weekly OAP by about £4.40 (before tax at basic rate) per year paid and also have these weeks index linked along with the rest of my earned pension?

As other posters have commented, the  about £4.40  (actually £4.44 in 2016/17) is now £5.29 and with regard to index linked, in fact, the position once triple link is restored (and assuming continues) is somewhat better than this - 2.5% or CPI or earnings (whichever is highest).

Under these circumstances it is likely to be well worth the OP's while to make the voluntary contributions?