My Dad retiring at 63 and a bit through ill health sort of

evei_2

My Mum is 63 and retired and getting her state retirement pension plus a works pension.

My Dad will be 65 in January and was working in a supermarket up until May 2009 when he decided to stop working because of health problems.

My Dad worked out that he and my Mum could manage financialy until he was 65 and got his state pension as he had cashed in a couple of frozen pensions so he had a lump sum and a monthly pension.


He handed in his notice and has not worked since.

He never even signed on at the job centre.

He applied for and got pension credits and council tax benefits only because I nagged him to at least phone up the freephone number, he declared his savings and pensions and even I was surprised at what he got.

So they are quite happily managing on about £200 a week and using their savings if necessary for any necessities for the house.

They are only paying £20 per month for their mortgage as it is near its end and they have had an endowment mature, the next one next August will pay off the mortgage.

Now to the question:)

Could he defer his pension for a year when he reaches 65 so that he will get extra pension or a lump sum in a years time and carry on as he is now, or will his pension credit stop when he becomes 65 and he will have to take his pension?

This has been suggested to him by my brother but I think he will have to take his state pension and if he doesn't his pension credit and council tax benefit will stop then but even if they do they would still have enough money to live comfortably for another year.

All my brother does is keep coming up with crazy ideas for our Mum and Dad, the thing is he has a well paid job and he pays for holidays for them and even pays to keep their car running.

In fact the reason they are managing is in part because of his advice and he doesn't even look at moneysavingexpert.

What do other posters think?

missile

I think he ought to take his pension at 65.

Sixtails

Pension credit will take the SP into account regardless of whether he actually claims. He may still be entitled to some savings credit, depending how much SP he is entitled to. CTB should be notified of the change of circumstances in the pc claim so the ctb may be ended as a result since it's unlikely that your parents will still be getting guaranteed pension credit.

Your father can still choose to defer his pension if your parents have the means to support themselves, but don't forget that if he defers & needs to get the money in a hurry - there will be a delay of a couple of months for the deferred money to be paid out. He may want to consider having the pension paid straight into a high interest saving account or an ISA & leave it to build up whatever interest it can, that way he has access in case of emergency

evei_2

I think he ought to take his pension at 65.

that was his intention until my brother mentioned deferring it.

My brother has all the money making ideas in the family and to be honest he has the most money, so whenever he starts giving advice to our Dad he tends to take it. That's how he managed to stop working last May.

Pension credit will take the SP into account regardless

I wonder if my brother realises that?

dunstonh

I wonder if my brother realises that?

I guess not otherwise he wouldnt have recommended it.

Means tested benefits take into account pensions you choose not to take by assuming that they are being paid.

Whilst not wanting to encourage manipulation of the system, did your dad (or brother) take into account pension credits when making the decision on how to receive the pension income (for the paid up/frozen pensions). i.e. including spouse and/or indexation to bring the income paid down to ensure greater payments of pension credit and possible future qualification after state pension is payable?

Endowments are not included in any means test. So, will the lump sum go to clear the mortgage or will some savings be required to cover a shortfall or will there be a surplus?

anmarj

dunstonh wrote: »

Whilst not wanting to encourage manipulation of the system, did your dad (or brother) take into account pension credits when making the decision on how to receive the pension income (for the paid up/frozen pensions). i.e. including spouse and/or indexation to bring the income paid down to ensure greater payments of pension credit and possible future qualification after state pension is payable?

even if he had not taken them. they would of been classed as notional income as well

dunstonh

anmarj wrote: »

even if he had not taken them. they would of been classed as notional income as well

Correct. However, he could have declared the options with the lowest income payments. i.e. 100% spouse, maximum guarantees, RPI indexation etc. Hence the bit about potential manipulation.

anmarj

dunstonh wrote: »

Correct. However, he could have declared the options with the lowest income payments. i.e. 100% spouse, maximum guarantees, RPI indexation etc. Hence the bit about potential manipulation.

unfortunetely a form is sent to the provider to confirm they would not of taken his word for it.

dunstonh

anmarj wrote: »

unfortunetely a form is sent to the provider to confirm they would not of taken his word for it.

Not a problem. Provider will confirm the options that the client has obtained an illustration on. There is absolutely nothing wrong with selecting options which reduce the income.

Bunter_2

Your brother is not as daft as you seem to think.

A deferred state pension is disregarded in the calculation of HB or CTB or for help with NHS and dental costs etc.

It may be regarded as notional income in the calculation of Pension Credit.

So there are a few things to consider. If your dad loses his PC he may still be able to claim CTB and help with health costs on low income grounds.

If he does the figures he should be able to work out how much he will benefit by deferring his State Pension.

Best to have a consultation with a benefits advisor.

It has nothing to do with manipulating the system and everything to do with maximizing his legitimate options.

If he can manage without his state pension he should consider deferring for a couple of years if the situation is advantageous to him.

The govt are encouraging pensioners to defer their state pensions.

evei_2

I visited my Mum and Dad and my Dad has decided that he will take his pension when he is 65 and not bother deferring it.