Less than 4,000 people take advantage of market-beating state pension top-ups


Figures obtained from the government reveal the startlingly low take-up of voluntary state pension top-ups, despite the attractive rates on offer. 

Less than 4,000 people have taken the opportunity to make Class 3A voluntary national insurance contributions, suggesting that the option to buy extra pension income at very favourable rates is not well understood.

Data provided by the Department for Work and Pensions (DWP) in response to a Freedom of Information request by Old Mutual Wealth shows just 3,848 eligible applicants purchased additional state pension units six months into the eighteen month eligibility window*.

Uptake is below government expectations. It originally projected eligible individuals would spend over £800m purchasing additional state pension income (£435m in 15-16 and 16-17). But savers committed just £64,252,000 to the scheme up to April 10 this year. 

This is despite the fact that the rates available on additional state pension income are typically favourable when compared with the equivalent rate available through annuity providers.

A 65 year old can purchase an additional £1 of state pension income per week at a cost of £890. At £52 per annum this reflects a rate of 5.84%.

A 75-year old can access an extra £1 per week (£52 per year) for £674, a rate of 7.2%.

Voluntary state pension top-ups offer 50% spousal benefit and will grow with inflation. This means the terms available are comparable with an index-linked, joint-life annuity available on the private market, but at better rates.

Comparable annuity products are currently offering around 2.7%.

The data from the DWP shows that among the 3,848 people to have taken advantage of the scheme and the average amount of additional pension purchased stands at £21 per week, costing £16,500.

Jon GreerCommenting on the figures, Old Mutual Wealth pension technical expert Jon Greer says:

“Voluntary state pension top-ups represent a good deal, giving savers access to a guaranteed income at a reasonable rate of return, with inflation protection and spousal benefits.

“In the first quarter of 2016 alone, 21,200 annuities were sold in the UK. Many of the customers that purchased those products will have been eligible to top-up their state pension at a better rate.

“Unfortunately, few people seem to have been aware of the option, perhaps because of the confusing ‘Class 3A’ label, or the distraction of high-profile pensioner bonds and pension freedom reforms also introduced last year. 

“State pension top-ups won’t be right for everyone, but they are certainly something that people should consider as part of their retirement income plan.

“In particular, those who want a guaranteed income, or who are not entitled to the full state pension, should give serious consideration to state-pension top-ups.

“The good news is there is still time to act. Eligible participants can still apply for a state-pension top-up until April 2017.

“Taking control of retirement income decisions can be challenging and there are numerous options available. This includes topping up your state pension or deferring the state pension, which for some people could offer an even better rate of return, as well as a wide array of annuities and income drawdown solutions available through the private sector.

“Finding a sustainable retirement income strategy that meets your needs is a complex process and it is best to speak to a financial adviser for professional help putting together the right plan.

“The FCA recently served a reminder of the importance of making informed retirement-income choices, again highlighting how vital it is that people that time to consider their options and seek expert support to help them make the right choices.”

*Figures obtained by Old Mutual Wealth courtesy of Freedom of Information request. Data from October 12 2015 to April 10 2016 supplied by the DWP. 



For more information contact

Michael GlenisterOld Mutual Wealth020 7778 963807469

Notes to editors:

Quilter is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

On a ‘go forward basis’, Quilter oversees £ 111.6 billion in customer investments (as at 31 March 2018).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset and single strategy investment solutions; and discretionary fund management.

The business is comprised of two segments: Wealth Platforms and Advice and Wealth Management.

Wealth Platforms includes the Old Mutual Wealth UK Platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

Advice and Wealth Management encompasses the financial planning network, Intrinsic; Old Mutual Wealth Private Client Advisers; discretionary fund management business, Quilter Cheviot; and Old Mutual Wealth’s multi-asset investment solutions business.

The Quilter businesses will be re-branded to Quilter over a period of approximately two years following separation from Old Mutual:

  • Intrinsic to Quilter Financial Planning
  • Private Client Advisers to Quilter Private Client Advisers
  • The Multi-Asset business to Quilter Investors
  • The UK Platform to Quilter Wealth Solutions
  • The International business to become Quilter International
  • The Heritage life assurance business to Quilter Life Assurance
  • Quilter Cheviot will retain its name.

On 19 December 2017, Old Mutual Wealth announced that it has agreed to sell its Single Strategy asset management business to the Single Strategy Management team and funds managed by TA Associates. The proposed transaction is subject to customary closing conditions, including regulatory approvals. 

Quilter is part of Old Mutual plc, a FTSE 100 group that provides investment, savings, insurance and banking. For the year ended 31 December 2017, Old Mutual reported an adjusted operating profit before tax of £2.0 billion. For further information on Old Mutual plc and the underlying businesses, please visit the corporate website at


These materials are not an offer to sell, or a solicitation of an offer to purchase, securities in the United States. The securities to which these materials relate have not been registered under the US Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. There will be no public offering of the securities in the United States.

These materials do not constitute or form a part of any offer or solicitation or advertisement to purchase and/or subscribe for Securities in South Africa, including an offer to the public for the sale of, or subscription for, or the solicitation or advertisement of an offer to buy and/or subscribe for, shares as defined in the South African Companies Act, No. 71 of 2008 (as amended) or otherwise (the “Act”) and will not be distributed to any person in South Africa in any manner that could be construed as an offer to the public in terms of the Act. These materials do not constitute a prospectus registered and/or issued in terms of the Act. Nothing in these materials should be viewed, or construed, as “advice”, as that term is used in the South African Financial Markets Act, No. 19 of 2012, as amended, and/or Financial Advisory and Intermediary Services Act, No. 37 of 2002, as amended.

These materials are distributed in any member state of the European Economic Area which applies Directive 2003/71/EC (such Directive, together with any amendments thereto including Directive 2010/73/EU, the “Prospectus Directive”) only to those persons who are qualified investors for the purposes of the Prospectus Directive in such member state, and such other persons as these materials may be addressed to on legal grounds, and no person that is not a relevant person or qualified investor may act or rely on this document or any of its contents.

This document is being distributed to and is only directed at: (i) persons who are outside the United Kingdom; or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 as amended (the “Order”); or (iii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons in (i), (ii) and (iii) above together being referred to as “relevant persons”). Any invitation, offer or agreement to subscribe, purchase or otherwise acquire securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

This press release is for journalists only and should not be relied upon by financial advisers or customers.

Please remember that past performance is not a guide to future performance. The value of investments and the income from them can go down as well as up and investors may not get back any of the amount originally invested. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is issued by Quilter plc.  Registered office: Millennium Bridge House, 2 Lambeth Hill, London EC4V 4AJ, United Kingdom. Registered number: 6404270.  Registered in England.