Deferred state pension, how much will I receive?

Bazzh

I reached 65 in June 2010. At that time my state pension entitlement was £123.00 per week. If I took the increased pension now, rather than the lump sum, how much should I receive? As I will be contacting the DWP soon,to see what figure they arrive at. Many thanks.

M.R.W.

Hi there


State pension is increased by 0.20% per week in deferral. With 52 weeks in a year, that's an increase of 10.40% per annum.


My very rough workings give an increase of 35.80% for your pension, which would be take you to around £167 per week.

kidmugsy

M.R.W. wrote: »

Hi there
My very rough workings give an increase of 35.80% for your pension, which would be take you to around £167 per week.

1) Plus you can add on the inflation-linked rises for April 2011, 2012 and 2013.

2) I have a vague memory that they pay out the extra according to the number of complete 5-week periods that you deferred for. (Can anyone confirm or refute that?) If so, it might be worth working through calendars/diaries to choose a start date that is a whole number of 5-week periods.

Bazzh

Thanks M.R,W I think that figure would exclude annual increases, which would be around £13 per week in total.

Bazzh

Thanks Kidmugsy, that should take me to around £180.

M.R.W.

kidmugsy wrote: »

1) Plus you can add on the inflation-linked rises for April 2011, 2012 and 2013.

2) I have a vague memory that they pay out the extra according to the number of complete 5-week periods that you deferred for. (Can anyone confirm or refute that?) If so, it might be worth working through calendars/diaries to choose a start date that is a whole number of 5-week periods.

Indeedy, I forgot to include the indexation in my calculation, so yes it should be higher than the £167 I suggested.


Also I think you are correct about the full 5 week periods. Back in finance school they drilled it into me as 0.20% per week, but I think the official DWP line is 1.00% per 5 week period.


Matt

jamesd

IN your earlier thread I see that nobody answered your point "Assuming things stay as they are after 2015 and it is increased annually at 2.5%, or inflation rate, or average wage rise.I read that George Osborne may change this after the next election, so i'm thinking the lump may be the better option."

The lump sum isn't the best option. The inflation linking rate may change but it'll still remain better than the lump sum for those with normal life expectancy.

There's also talk that the amount gained from deferring will decrease once the flat rate pension comes in but that won't affect those like you who have reached state pension age before that happens.

So really not a lot for you to worry about.

SeekTruth

...
Also I think you are correct about the full 5 week periods. Back in finance school they drilled it into me as 0.20% per week, but I think the official DWP line is 1.00% per 5 week period.
...

My understanding is that the increase is 0.2% per week of deferment, subject to a minimum deferment of 5 weeks.

The original legislation (see http://www.legislation.gov.uk/ukpga/1992/4/schedule/5/enacted) states that the increase is 1/7% per week but that an increase is only paid if it is at least 1% (i.e. at that time would have to defer for a minimum of 7 weeks). The rate of increase was later increased to 0.2%.

Bazzh

Hi again. When I reached retirement age in 2010, the state pension was around £97 per week, so my extra pension or SP2 was £26 above the basic. I was in a contracted out company pension from 1998 to 2010. Would that mean me losing some, or all my extra pension.

Be_Happy

Also bear in mind that the extra pension you get from deferring is shown separately on your annual pension statement and rises at the same rate as any additional pension, NOT the same rate as the basic pension.

SeekTruth

Bazzh wrote: »

Hi again. When I reached retirement age in 2010, the state pension was around £97 per week, so my extra pension or SP2 was £26 above the basic. I was in a contracted out company pension from 1998 to 2010. Would that mean me losing some, or all my extra pension.

The S2P of £26 that you were quoted will already have taken account of the fact that you were contracted out, so you should not lose any of the quoted pension.

As an aside (and I know it does not affect the OP) could someone state what happens with deferment in the case where the pensioner has a GMP. I would assume that the 'gross' additional pension is increased by the deferment percentage but the COD is not. If this assumption is correct then for someone with a GMP the benefit of deferring for, say, one year could appear to be rather more than 10%.