MSE News: Pensioners to be given £25 a week state pension boost

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  • Jaycee_DoveJaycee_Dove Forumite
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    brewerdave wrote: »
    Deferral of the State pension for a year or two is an interesting alternative for me (provided that I can keep her indoors at work for 2 or 3 more years!!) - however, I thought that the 10.4% increase was only applied to the basic State pension? ie not to any additional pension earned?
    The biggest advantage of NIC 3a to me still seems to be a relatively cheap way of improving my wife's future finances rather than an annuity.


    I assume it is not as £13.09 extra for 52 weeks would only be possible if I had got 10.4% on both the basic SP and my additionals (ie the £123 ish that I referred to).
  • kidmugsykidmugsy Forumite
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    ...I had got 10.4% on both the basic SP and my additionals.

    That's right. On both.
    Free the dunston one next time too.
  • edited 5 April 2014 at 9:20PM
    uk1uk1 Forumite
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    edited 5 April 2014 at 9:20PM
    I agree, I actually bought a couple of now useless extra years myself to make up for my carer's role. When I expected to need over 40 years. Just never bothered to add that to my list of misfortunes as I thought I had moaned enough. :)

    I am sorry if I opened old but now forgotten wounds. I bought extra years for my wife and me and it still wounds me deeply ...:mad: Spent the bulk of it just before they reduced the years.

    How on earth does the government expect to encourage saving when they continually stuff us.
  • brewerdavebrewerdave Forumite
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    I assume it is not as £13.09 extra for 52 weeks would only be possible if I had got 10.4% on both the basic SP and my additionals (ie the £123 ish that I referred to).


    ...that would mean ~ £15 pw for me -deffo worth a think!!:T

    Also still seems to me, that converting my 3 small DC pensions to cash over the next 3 tax years to earn £25pw extra for my wife is a winner -£1300 py tax free for her PLUS £3K cash vs £850 py after tax for me via index linked joint life annuities. :)
  • SeekTruthSeekTruth Forumite
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    uk1 wrote: »
    ...

    The implication on the 3a calculator page is that the additional pension has to be started immediately the 3a cash is handed over with no deferral. That then seems to also halt any further main pension deferral.

    Hope someone can confirm or correct ...
    See https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/265390/v2_mw__20131211_policy_brief_formatted_FINAL.pdf, which states:
    As with ‘standard’ additional State Pension, this extra additional State Pension will have the following characteristics:[...] • can be deferred – it can be used to build up a lump sum or can be added to the pension, once claimed,through increments; [...]
  • That makes for an interesting calculation. I guess.


    If you are already deferring is it worth buying extra via NIC 3A given that this extra sum will then accrue 10.4% over however much longer you continue to defer it?


    Will certainly make it a more favourable option to do both as you get a better return than you could by merely saving it via a high interest account.


    And, if you want the money back as opposed to extra pw on your pension you have the lump sum option after a year va deferral that you do not get simply by paying for the NIC 3 A top ups.


    So purchasing during, or alongside, deferring looks to be a great way to increase the value and flexibility of simply buying these 3A top ups in the way they are being advertised?


    Unless I am missing something that someone will, I am sure, spot and point out.


    Perhaps Martin will be reviewing these threads and give us his considered thoughts in due course. They would be appreciated.
    :)
  • edited 6 April 2014 at 1:22PM
    uk1uk1 Forumite
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    edited 6 April 2014 at 1:22PM
    So the procedure would be if you are currently deferred but qualify for 3A, to apply for 3A and if you do nothing it will lump in and stay deferred until you take the main pension?

    Interestingly that then offers two different rates for whichever date you apply. Presumably this offers arbitrage because you can apply at the earlier date and receive the 10.4% from that date which is likely to be better than the lower 3A on the final date in the range and 10.4% from that date.

    This seems like a good thing if people can finance further deferrals by eating into savings.

    Finally.... can someone else check. Is the calculator incorrectly taking age at next birthday rather than current age?
  • SeekTruthSeekTruth Forumite
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    uk1 wrote: »
    ...
    Finally.... can someone else check. Is the calculator incorrectly taking age at next birthday rather than current age?
    I agree that it is not working properly. I tried an example with a person with a birthday in June and the amount changed depending on whether it was paid on 31st Dec 2015 or 1st Jan 2016.
  • uk1uk1 Forumite
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    SeekTruth wrote: »
    I agree that it is not working properly. I tried an example with a person with a birthday in June and the amount changed depending on whether it was paid on 31st Dec 2015 or 1st Jan 2016.

    Thanks. Thought I was going barmy. You think they might check it.

    Unbelievable isn't it. I wonder what rate they will use. lottery. A p¥$$ up in a brewery.
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