Defer State pension?

gfplux

I understand that a number of people on these forums have deferred their state pension. I am due to receive mine in the next 12 months and wondered what the benefits are when you defer taking it.
Does anyone have any figures?

chesky369

In fact, the pensions people themselves have a table of what you can expect over the possible period of deferall. I did and have no regrets but it's a really personal decision, based on each individual's requirements.

chesky369

PS particularly as savings accounts interest rates are low, it is probably a better deal than it was a couple of years ago.

MrsGrey

I have just reached state pension age. I don’t need to draw my pension at present. I understand about deferral, however I am wondering this: is it financially more advantageous for me to draw the pension from now and save the payments in an account ? It seems from what I have read, that the government gives the Base Rate + 2% on deferred pensions, but at the end of the deferred period, thus the payments are not compounded over the period of deferral. Does anyone know what rate of interest I would need to find from a savings account in order to do better? I am a standard rate tax payer.

Thanks.

MrsGrey

chesky369 wrote: »

In fact, the pensions people themselves have a table of what you can expect over the possible period of deferall. I did and have no regrets but it's a really personal decision, based on each individual's requirements.

Do you have a URL for this table, Chesky?

MrsGrey

http://www.thepensionservice.gov.uk/pdf/spd/spd1may08.pdf --for the detailed pension leaflet on deferral.

Decided to do my own work!
Be warned, the tables were drawn up in MAY 08, so with the gov't giving base rate + 2% on deferred pensions, the tables assume 7.5% !! Now it would be 4%.
So who is good at sums who can answer my original question: what level of interest, compounded, do I need to get on saved, drawn pension, to do better than 4%, ie what the government is offering on deferred pension ( simple interest)?

Newly_retired

The main advantage to me in deferring was to avoid paying more tax. As I was on a good salary I did not want to go into the 40% band. Paying into my pension, AVCs etc and not taking my state pension kept me out of higher rate tax. I waited till I stopped work before drawing state pension, then chose to take it at an increased rate rather than a lump sum - but your choice will depend on your personal circumstances.

exil

Pension is £4716 a year.

You defer paying it for 1 year.

It's increased by 4% to £4904 (a guess but the principle holds whatever)

so - you sacrifice £4716 in one year to gain £188 per year for the remainder
of your life. If you are 65 you have to live another 25 years - ie until age 90 - to
gain from deferring your pension. Even longer if you can invest the £4716 at a rate that beats inflation over the long term.

If the increase for deferment is 5% this comes down to 20 years, and so on

Francesanne

gfplux wrote: »

I understand that a number of people on these forums have deferred their state pension. I am due to receive mine in the next 12 months and wondered what the benefits are when you defer taking it.
Does anyone have any figures?

Don't want to be gloomy but who knows what's round the next corner. I intend to take my state pension the very minute it's due.

exil

Being even more morbid, a male 65 year old has a 1.5% chance of a meeting with the
Grim Reaper in the next 12 months.

gfplux

After looking at exil's calculation I think I will be taking my pension as soon as I can. Thanks for all the information.