Pension deferral

dixeybird

Is deferring your pension worth while?
I will soon be due for my state pension and being self employed will only receive the basic £102 + a few pence graduated pension.
I would like to get that bit extra money each week later when I stop working, but at what point is there a breakeven point were you would recover payments not taken.
Do you get inflation increase on the deferred amount also, or just on the original basic amount?
We all don't know how long we are going to receive our state pensions but assuming I live (hopefully) into my eighties is it worth doing?

jamesd

Yes. Assuming good/normal health the optimal deferral for a man is between one and three years of deferral and for a woman three to five years, with the biggest gain after three. Those in unusually good health with long life expectancy may wish to defer more, those who have formerly done hard manual labour or worked in jobs associated with reduced life expectancy may not wish to defer at all.

Deferring is a particularly good deal for women with a spouse because the income will continue unchanged after the death of their spouse, which often means a reduction in their household income as the pension from the spouse stops or is reduced.

dixeybird

Thank you for your reply, do you know if you get any inflation increases added to the deferred part of the pension along with any normal increase added to the basic pension.(or is it all lumped together for any increase )

zygurat789

dixeybird wrote: »

Thank you for your reply, do you know if you get any inflation increases added to the deferred part of the pension along with any normal increase added to the basic pension.(or is it all lumped together for any increase )

Not quite sure I understand you but

It is the pension which you would have received which is being deferred so the weekly amount deferred increases each year.
In addition interest is added to the deferred amount of bank rate + 2%.
More importantly the deferred pension can be used to increase your SP by 10% approx for every year deferred. This just has to be the best bargain in pensions today.

Any help?

hugheskevi

After you claim State Pension following deferral, you still get Basic State Pension at the normal rate, which increases each year by the triple lock (best of earnings, CPI or 2.5).

You also get a payment of increments, which is the extra 10.4 percentage points for each year of deferral. That amount goes up each year in line with CPI.

Be aware that the uprating of both State Pension and increments may change at little or no notice in the future.