Putting off claiming State Pension

loulou41

Hubby will be 65 yrs in a few months time and he has to fill a form to claim his state pension. He has already retired 7 yrs ago from the NHS. What he wants to know whether it is worthy to put off claiming the state pension for at least a year? My understanding if he does, he will get an extra 10.4% more after a year. Suppose he dies during that year, I guess, the pension will be lost as well, is it a chance he has to take, hoping nothing will happen to him during that year. Also if he does put it off, he will not be above the £19500 a year for old age allowance. Does anybody know whether the £19500 is before or after tax? Not sure whether it is the right forum to post this, I will post it at the silver savers forum as well. Thanks

CIS

Whether its worth his while to put off depends on how he does it

Theres 2 versions, assuming hes got a full pension in these examples;

Increments
For Increments you defer your pension for 1 yr, on a full pension of £82 per week, that means you loose £82 * 52 or £4264, in order to get an increase of £8.5 per week.

To recover the lost money , it would take (£4264/8.50 = 502 )502 weeks to recover the money lost on jsut 1 year at the basic pension rate.

Lump Sum
Probably the best deferment option. He gives up his pension for 1 year and at the end of the 1 year, he gets the value of the deferred pension £4264 + interest. His pension then resumes at the 100% rate he would get had he not deferred (uprated to current amounts)

As a married woman, if you where due any incraese of his record (to take your pension to 60%), you cant get it whilst he is deferring/not claiming his pension in any way

More help here (including widows info)
http://www.thepensionservice.gov.uk/statepensiondeferral/need-to-know.asp

loulou41

Thanks, a bit confused now, he will get £82.17, not sure whether it is the full pension. If I understand correctly, you think taking the lump sum will be better and he will still get his basic pension + 10.4% more? I have three more years to be able to claim mine. Thanks for your help.

CIS

Thats the full basic pension of £82.05 + 15p of either Graduated or Additional Satte Pension.

If he takes the lump sum, he gives up his pension completley for 1 year and the government invets it and gives in a % interest on it (think savings account), at the end of 1 year, he can draw his pension.

He would then receive lump sum + interest , and the his normal rate pension of £82.17 would resume (or whatever it was uprated to at the time)

loulou41

Thanks, understood now, the only problem is if he happens to die during that year, he has deferred, then his pension will be lost. It's just a thought. I think, he has decided to defer for one year and then take the extra £8+ a week. Thanks again.