asked Her Majesty's Government:

What the estimated cost and numbers would be in 2010, 2020, 2030, 2040 and 2050 for United Kingdom and for non-United Kingdom residents respectively, who already have 20 years' national insurance contributions, of purchasing an additional nine years if they retire before April 2010 and an additional six years if they retire after April 2010, assuming in both cases a 10 per cent take-up. [HL2624]

Estimates for the number of potential gainers and costs are shown in the following tables. The restriction of 20 years of contributions takes into account years where home responsibilities protection is in place.

Table 1 (a) Allowing people reaching SPA between 2008-2010 to pay class 3 contributions for an additional nine years, and those reaching SPA after 2010 to pay class 3 contributions for an additional six years, provided that they already have at least 20 qualifying years (taking account of HRP), assuming 100 per cent take-up.

Table 1 (b) Allowing people reaching SPA between 2008-2010 to pay class 3 contributions for an additional nine years, and those reaching SPA after 2010 to pay class 3 contributions for an additional six years, provided that they already have at least 20 qualifying years (taking account of HRP), assuming 15 per cent take-up.

Table 1 (c) Allowing people reaching SPA between 2008-2010 to pay class 3 contributions for an additional nine years, and those reaching SPA after 2010 to pay class 3 contributions for an additional six years, provided that they already have at least 20 qualifying years (taking account of HRP), assuming 10 per cent take-up.

Source: Information about people's national insurance records has been obtained from the Lifetime Labour Market Database 2, 2005 release. Costs have been estimated based on mortality assumptions for Great Britain from the 2004-based population projections.

Notes:

1. Estimates for net costs have been rounded to the nearest £5 million. Estimates for potential gainers have been rounded to the nearest 5,000. Totals may not sum due to rounding.

2. Estimates assume basic state pension is uprated in line with earnings from April 2012.

3. Estimates assume that people buy additional class 3 national insurance contributions in whole years, even if less than 52 weeks of additional contributions are required to achieve a qualifying year. People buy these extra years when they reach state pension age.

4. Estimates assume that the option to buy extra years is available to everybody with a national insurance record and can be used to fill any deficient year between 1975 and state pension age provided that there is not a valid married women's reduced election in force for the year in question.

5. Estimates are for costs of increased category A pension net of any resulting reduction in entitlement to category B pension derived from a spouse's or former spouse’s contributions.

6. Estimates are based on a sample of national insurance records as at the end of the financial year 2003-04.

7. Net costs take account of income-related benefit savings.

8. Estimates show potential gainers. They will all increase their basic state pension entitlement if they take up the option but it is not known whether they will benefit from an increase in total income overall due to interactions with pension credit and other income-related benefits.

9. The option has been limited to cohorts reaching SPA between 2008 and 2020 in line with previous estimates and in order to address the cliff-edge effects.

10. Years refer to the financial year, ie 2010 covers the period 6 April 2010 to 5 April 2011.

11. Net present value takes into account costs occurring before 2050. There may be small ongoing costs after this time.

12. Given the uncertainty around how many people will take up such options, the 100 per cent take-up rate has also been included.