It was also “a pretty complicated scheme,” he added, since savers were paying voluntary national insurance contributions to buy State Earnings Related Pension Scheme (SERPS) payments and people didn’t used to be able to do that.
It was also new that individuals would be able to top up their pension once they were into retirement, and there were date limits on who could buy the contributions, Sir Steve added.
Nevertheless, the main enemy to the scheme was another government programme announced by the Treasury in 2014 which didn't actually launch until earlier in 2015, the same year as the state pension top-up.
"[Then chancellor George Osborne] created two new national savings bonds – one year and three year – which offered ‘market-beating’ rates of interest; these were a familiar and simple product and in my view cut the floor from beneath the voluntary NICs scheme [launched by the pension minister].
More than one million pensioners had invested more than £13bn in these bonds by May 2015.
According to Gem Durham, independent financial adviser at Obsidian, the main reason for little take up of the state pension scheme was “that it was little understood and not very well publicised”.
She said: “There’s also the investor behaviour of immediate gratification – thereby valuing the money in their pocket now more than more money in the future.”
maria.espadinha@ft.com
