The new scheme which was introduced in October 2015 to enable men born before 6 April 1951 and women born before 6 April 1953 to top up their State pensions has been largely ignored, even though the available income is twice that which could currently be obtained from buying an annuity.
Reluctance to part with cash could be part of the reason for the reluctance to take up the offer, but other reasons suggested are that the scheme is only available on-line (32% of over 65-year olds do not have a computer) or by paying 12p per minute for phone calls.
The cost of the top-up reduces according to age, reflecting the shorter periods over which the income will be payable. A 65 year-old man can buy an extra £1 of State pension per week for £890 (a return of 5.84%) whereas the cost for a 75 year-old man would fall to £674 (a return of 7.2%).
Depending on individual circumstances, a maximum of £25 extra weekly income is available through the scheme.