Is it worth deferring state pension?

KMK

I shall be 60 next January and will qualify for a full state pension. I am lucky enough to have a reasonable occupational pension and my husband still works. So I could defer the pension, but am unsure whether what is on offer is worthwhile. Could I invest the money better elsewhere or should I just take the pension and spend it?

Has anyone else faced this decision? I would be interested in your advice.

CIS

It depends on the type of deferment, increments or lumpsum.

Increments give you a 1% return for each 5 week period that you completely give up your pension for, so give up 5 weeks @ 80 p/w = £400 given up in return for £.80p extra per week when you draw your pension. It would take (400/.80)= 500 weeks to make back 5weeks lost pension.

Lump sum defers your whole pension for a minimum of 12 months @B.O.E base rate + 2%, so you give up £80*52 = £4160, to get a return of £4300, but the lump sum is taxable (it has special rules applied), adnd you then receive teh £50 per week pension.

More here
http://www.thepensionservice.gov.uk/statepensiondeferral/

Midas

If you are still working and paying tax at 40% it may be worth it. It depends on your personal circumstances. You should speak to an IFA (or do the maths yourself).

alared

If you drop dead during the deferment period,what happens to the money you didn`t draw?

loulou41

Hubby had to make this decison, in the end we decided against it as we did not think it was worthy. He will get his first pension next month. Hope this helps.

chesky369

I decided to defer, since I'm paying the higher rate of income tax and I definitely won't be when I actually get around to retiring in a couple of years time. I worked out that I have to live three years after starting to draw it and then I'm ahead.