Defer State pension?

paberley1

My mates dad referred his pension then claimed pension credits (a loop hole) apparently. He has just had a lump sum of around 18k, doesnt have to pay it back and is now claiming his pension.
This doesnt make any sense but if it works sounds good. He is 69 this year.

EdInvestor

paberley1 wrote: »

My mates dad referred his pension then claimed pension credits (a loop hole) apparently.

Sounds like benefit fraud to me.

toshtec

I did a search on this and found a leaflet with an instance of it :

http://www.thepensionservice.gov.uk/pdf/spd2/spd2sep08.pdf

If you claim Pension Credit while you are putting off claiming your State Pension, we will work out your Pension Credit as if you were getting your State Pension. We cannot pay Pension Credit instead of the State Pension you have chosen to put off.

So it seems that you can do it but not benefit from doing so and it looks like it is not fraud

EdInvestor

toshtec wrote: »

We cannot pay Pension Credit instead of the State Pension you have chosen to put off.

Ah, that's all right then

It sounds as though the gent mentioned might have had a state pension entitlement of around 76 pounds a week, and would have been entitled to additional pension credit of around 54 pounds a week at age 65. If he were also receiving other means tested benefits which were adequate to cover his living costs such that he could save, it might make sense to take the lower amount and accumulate a lump sum.

moonrakerz

Question:

Is the Government going to give you extra money if you defer your pension ?

Answers on a postcard to G Brown !

jancee_2

exil wrote: »

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

This is incorrect. You can either take a higher weekly amount, 10.4 per cent higher after one year. Or after a minimum of a year you can choose a lump sum of all the payments you've so far deferred plus interest of 2% above BoE base rate, then in this scenario you revert to the original entitlement.

Minimum deferrment five weeks, no maximum.