Deferring State pension Yes/No?

D1zzy

I'm sure this has been asked loads of time before, but am interested in any thoughts.

Just received my pension forecast of £122 pw. If I defer for 1 year I'd get an additional £12.69 - it will take just under 10 years to pay back the dererred amount & we have a difference of opinion....

Me - a bird in the hand; I can stick it somewhere & get more than 2.5% (or I can spend it ); I might not live 10 years.

OH - that's more than you would get with most deferral options; odds are you will live well beyond 10 years so will ultimately gain; future % increases would be based on a higher figure.

I am a basic rate Tax payer and we are lucky enough financially to be a position for me to be able defer for a year or maybe more, so its an emotional /academic decision.

McKneff

For me personally, i hit sixty in October and did not defer.

I looked into it and while i want to live another 10 years, i might get run over by a bus tomorrow. Its all a gamble really.

So,I'm having it all and I'm having it now. (while i can enjoy spending it)

Consumerist

1. Be aware that if you die before claiming your pension then only up to three months of your deferred pension [STRIKE]lump sum[/STRIKE] will be paid to your estate.

2. Be aware that The Pension Service is renowned for paying out deferred pension lump sums late.

3. Be aware that if you want to claim your deferred pension, you can give The Pension Service four months notice. The Pension Service will tell you that you only need to give two months notice. To get the full deferred lump sum, you must have claimed your deferred pension before you die. Make sure you give the four months notice in writing.

Be_Happy

Consumerist wrote: »

1. Be aware that if you die before claiming your pension then only up to three months of your deferred pension lump sum will be paid to your estate.

This is a bit confusing. What you state above applies to someone who dies leaving NO spouse or civil partner. Where there is a spouse or partner the rules are different. As I understand it, they can inherit an increased pension (if they are of pensionable age) based on your deferred pension increase OR your lump sum. (I think this only applies if you have been deferring for more than 12 months)

In any case the 3 months limit payable to the estate is 3 months of the deferred pension increase amount. There is no payment of any lump sum accrued.

gfplux

I chose not to defer.
Who knows what will happen in the future. A bird in the hand is better than one in the bush.

seven-day-weekend

I will be 60 on January 27th and will receive my pension (paid weekly) on February 1st. The Government are not keeping it a moment longer than necessary!

Seriously, it is purely a personal choice.

alared

Get it as soon as you can and get it paid WEEKLY.

patanne

Can Consumerist please let me know where the "only 3 months" is written as I was under the impression it was the full amount. I am in favour of deferring (as I'm planning on living until at least 100!) but to take the increased pension not the lump sum. If I took it before retiring I would have to pay tax on every penny as you do with a lump sum (unless you have no other earnings in the tax year!)

Consumerist

seven-day-weekend wrote: »

I will be 60 on January 27th and will receive my pension (paid weekly) on February 1st. The Government are not keeping it a moment longer than necessary!

It is the lump-sum option from a deferred State pension which The Pension Service is renowned for paying late. The regular pension is, so far as I am aware, usually paid on time.
.

Consumerist

patanne wrote: »

Can Consumerist please let me know where the "only 3 months" is written . . .

On page 67 of The Pension Service booklet "Your guide to State Pension Deferral" (SPD1) it states:-

"It [deferred State pension lump sum] can form part of your estate only if you die after you have claimed your State Pension".

Page 43 of The Pension Service booklet "Your guide to State Pension Deferral" (SPD1), refers to the three months under the heading "If you are not married or not in a civil partnership". There's quite a bit of it so I won't quote it all here.

I have been referring to the April 2006 version of SPD1 but I have just realised there is a May 2008 version which you should refer to for up-to-date information. See page 57.

Hope this helps.
.

Consumerist

Be_Happy wrote: »

. . the 3 months limit payable to the estate is 3 months of the deferred pension increase amount. There is no payment of any lump sum accrued.

Quite correct. My error.

Trying to answer too many questions in my head at once.