Are you missing out on this 6pc pension boost?

Hundreds of thousands of pensioners are in danger of missing out on a guaranteed income of around 6 pc for life — simply because they don’t know about it, experts say.

the chance to lock into a government scheme by paying national insurance class 3a voluntary contributions is only open for the next few months.

With rates plummeting on bank savings deals and annuities from insurance companies, which provide guaranteed income for life, the state Pension top up offers a much better deal.

but so far fewer than 4,000 out of an expected 265,000 have taken advantage of it.

the scheme is a sweetener for the 12 million who missed out on the new ‘flat rate’ £155.65-a-week state pension which came in last april.

and it’s a huge boost for the self-employed, because until now, many have been unable to build up so- called additional state pension, which can be worth as much as £164 a week extra.

Instead they’ve only been able to rely on the £119.30-a-week basic part of the old state pension.

thousands of older working women who paid the married woman’s stamp — a reduced national insurance rate phased out in the late seventies which saved them money — could also benefit.

the top-up is open to men who were born before april 6, 1951, and women before april 6, 1953, who live in the uK, and who already receive a state pension or are entitled to one.

It works like an annuity where you hand over a lump sum in exchange for a guaranteed income for life — but it is only available until april 5 next year.

the income is inflation-proofed, so your income will rise in line with the consumer prices index each year. For married couples, the surviving partner receives at least half of the additional pension on death.

You can get between £1 and £25 extra pension a week by paying Class 3a voluntary national insurance contributions to HM Revenue & Customs.

You pay £890 for each £1 of extra pension a week if you are age 65. to gain the full £25 a week would cost £22,250 which works out as a return of 5.84 pc.

a similar deal from an annuity with an insurance company pays less than half this amount at nearer 2 pc, figures from Retirement Intelligence show.

these rates have plummeted by a fifth in the last year.

Meanwhile, the best easy-access savings accounts pay no more than 1.2 pc.

Yet despite the attractiveness of the state pension top-up scheme, a freedom of information request by financial company old Mutual Wealth reveals only 3,848 signed up in the first six months.

the benefits are even more generous if you buy the top-up at age 70. the cost drops to £779 for each £1 of weekly pension — or £19,475 for the full £25 — a return of 6.67 pc. It’s cheaper because the older you are, based on average life span, you won’t benefit for as many years as a younger person.

the price is the same for men and women even though the average life expectancy for men is 86.6 years and women a longer 89.3 years.

the scheme will appeal particularly to pensioners whose spouses are of a younger age and can expect to claim the income for years after their husband or wife dies.

but the deal will not suit everyone. the key is how long you live because you won’t get anything back when you die. If you are single or in poor health, the chances are it will be a poor deal. You would shell out the lump sum and die without reaping the benefits. the extra income is taxable if it pushes your income above your personal allowance of £11,000 for this tax year. If you take money out of your pension pot (under the new pension freedoms) to buy the top-up, you could face an extra tax bill which would reduce your return. and if you receive other benefits or pension credit you also need to do your sums. You could also be better off by filling in gaps in your national insurance record by using Class 3 voluntary contributions if you are eligible to make them.

Jon Greer, pension technical expert at old Mutual Wealth says: ‘In the first three months of this year, 21,200 people bought annuities from insurance companies.

‘Many will have been eligible for this state pension top-up at a better rate. unfortunately, few people seem to have been aware of the option.’

a spokesman for the Department for Work and Pensions, says: ‘Many people stand to benefit from the scheme. We have extensively publicised its value.’

to apply for the top-up you need proof of your identity, such as your P60 or the last four digits of your bank account, and your National Insurance number.

Call 0345 600 4270 or go to gov.uk/statepensiontopup.

to check your National Insurance contribution record and whether you’ll be better off filling in gaps, call 0800 731 7898 (option 3). sy.morris@dailymail.co.uk