State pension deferral - worth while??

patanne

You could try working it out for yourself. Say your original state pension was £5000 per year for the 3 years & you save that (taxable) or put it in a private pension (at least in a pension you would get back the tax you would have had to pay) Can you then be sure that from that £15000 you get £1500 per year that you would get by deferring.

I have to admit here that my circumstances were a little odd & there is no way I could have retired on my original state pension even with a private pension (which I still haven't needed to get round to taking).

Telegraph_Sam

patanne wrote: »

When I worked it out for myself I only had to survive for seven years to get all 5 years worth back, but this will to some extent depend on your circumstances. I do also know that I would never have considered taking the lump sum. But all this, as I said, does depend on your own circumstances.

To take account of this is where I had a "vision" of a spreadsheet (compiled by an expert) where you could input the various circs and assumptions and it would conveniently tell you which was the best course of action!

JohnB47

I am confused. You are 3 years past SRA but you are asking for clarification on the terms of deferring the state pension.

Is this simply a question out of interest? The answers that you are receiving suggest that it's possible to defer after we are in receipt of state pension ( I'm pretty sure it isn't).

patanne

It may seem incredible but yes you can actually defer once after you have started taking your state pension.

Telegraph_Sam

@ John B47

I'm past SRA and have been deferring up to know whilst wondering if this was the correct decision and if so how long to continue whilst circs permit!

I had discounted the idea of retro-deferring cos I didn't know you had this option.

noh

JohnB47 wrote: »

I am confused. You are 3 years past SRA but you are asking for clarification on the terms of deferring the state pension.

Is this simply a question out of interest? The answers that you are receiving suggest that it's possible to defer after we are in receipt of state pension ( I'm pretty sure it isn't).

You can elect to stop receiving state pension.
See page 18 of this leaflet
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210220/DWP024.pdf

patanne

Only you can figure out whether it is worthwhile deferring as it is totally dependent on your own circumstances. I DO know that for mine it was definitely a very good decision as I landed up with a bigger state pension than I had been earning for the last few years on short time. I must say though I have never seen the rationale behind taking it as a lump sum. Unless of course the lump sum was needed to pay off any outstanding debts or the remaining mortgage, but to put it into (even an extremely good) saving account just never seemed very viable to me.

Bazzh

patanne wrote: »

If I understand you correctly, you have already deferred your state pension for 3 years. If so, this means that for every £100 you were getting a week you will now get £131.20 per week (I've ignored the normal increases which have been around 2.5%.

When I worked it out for myself I only had to survive for seven years to get all 5 years worth back, but this will to some extent depend on your circumstances. I do also know that I would never have considered taking the lump sum. But all this, as I said, does depend on your own circumstances.

DWP calculation. Pension at retirement £138.00 divided by 500 = 0.276 x 195 weeks deferred = £53.82. Weekly pension total £191.82

Telegraph_Sam

patanne wrote: »

Only you can figure out whether it is worthwhile deferring as it is totally dependent on your own circumstances

That is precisely the point: If circs permit some latitude in the decision (say for as long as the job continues) I am anything but convinced that the average Joe Soap can figure out (by himself) whether deferring is better than not deferring and if so for how long.

patanne

Exactly 0.2% per week or 10.4% per 52 week year.

You can figure out the ball park though. Although with me it was more a case of how much I wanted to live on. As in run a car on a shoestring or do without, so I would have deferred even if I thought I might not live until I was 72 (I did expect to as both parents did & I was fit but who knows whats ahead). You have the tools. How much was your expected state pension at expected retirement age? What is your life expectancy? If you are fit enough to be happy to still be working then I guess that is good.

So the state pension and any additional pension have gone up by approx 2.5% over the last three years. So take your expected state pension at normal retirement date. Then you need to uprate it by 2.5% for each year and then 31.2% for the 3 years deferment. So if you assume you are going to get £140 for every £100 you would have got - does that seem like a good deal? If you defer for 5 years then you are looking at approx £172 for every £100 originally.