The Department for Work and Pensions (DWP) recently outlined plans to introduce Class 3A voluntary National Insurance contributions, which will be called the State Pension top-up. Under these proposals individuals who reach State Pension Age (SPA) by April 2016 (the date of implementation of the single-tier pension) will be able to make voluntary National Insurance contributions to purchase extra additional State Pension.

This Briefing Note provides an overview of proposals around Class 3A National Insurance contributions and assesses the implications of these for individuals who have accrued small amounts of additional State Pension. 

Comparison of the additional State Pension with private annuities finds that the payment of additional Class 3A contributions may offer better value than a private annuity purchase for many individuals. However, the fact that it is inheritable by the spouse (including a civil partner) on the individual’s death means that it offers better value for married than single individuals.


To download Briefing Note 70, please click here.