Pensioners and those approaching retirement are to be allowed to make "top up payments" to ensure they receive the full state pension.

Ministers say that the scheme will help thousands of people, especially women and the self-employed.

Under the move they will be able to make a series of voluntary National Insurance contributions, allowing them to receive more when they retire.

The Chancellor announced that millions of people will have to work until 70 before they receive their state pension. The pension age is set to rise to 68 by the mid-2030s and to 70 at around 2060, he said.

The Coalition Government says the moves are necessary to ensure the system is affordable because people are increasingly living longer.

But they insist that workers will still spend an average of one-third of their working age life in retirement.

The UK Government had previously announced plans to raise the state pension age to 66 by 2020 and to 67 by 2028.

TUC general secretary Frances O'Grady said there was no evidence people were living any longer than the last time the Chancellor increased the state pension age.

"Yet today's young workers are being told they must work until they drop," she said.

There are already massive inequalities in the state pension, with a woman in Corby expected to receive £67,000 less than someone in East Dorset due to widening gap in life expectancy."