State pension deferment - lump sum calculation

Legacy_user

Good evening,

I would be grateful if someone could help with the following.

My dad has deferred his state pension for 2 years (and 1 week). He contacted the pension service for his quote for a lump sum payment, however the figure is lower than expected.

The figure quoted was based on his state pension at the time he turned 65 (which was £145.04 per week). This has been multiplied by 105 weeks ( 2 years + 1 week) and they have added the interest - 2.5% I think to give a figure of just over £15,500.

However the state pension increased in April 2012 to £152.57 and then to £156.26 in April 2013.

Therefore should these increases not be included in calculating his lump sum? He has spoken to 2 different ladies at the Pensions service and both have confirmed the same lump sum figure and that the state pension increases are not included.

This surely cannot be correct, as you are surely worse off deferring in this case?

Can anyone please shed any light (if the calculations are incorrect, who can my dad contact as i'm not sure?).

Thanks in advance

Bazzh

The State Pension Deferral Guide clearly indicates that annual pension increases are included.

System

Bazzh wrote: »

The State Pension Deferral Guide clearly indicates that annual pension increases are included.

Thanks Bazzh, i've just been trawling through the Gov site and found the guide. Will pass on to my dad thanks.

atush

Might want to pass it on to the DWP staff too

System

atush wrote: »

Might want to pass it on to the DWP staff too

yes too right!

patanne

Do get him to check that it is the best deal for him. The alternative would be 21% increase in his pension for the rest of his life. If he is looking at investing the £15k he would be struggling to get 10% on it. Of course, this all depends on his circumstances and only he can decide that but it is a decision best made with all the info.