Pension deferral rules

Uncle_Stinky

After persuading Auntie Stinky to defer her pension (as advised in an investment thread) I now find that this is not possible as, according to DWP, she has already deferred once.

She delayed claiming for 10 months in 2011 and DWP says that this counts as the only permitted deferral.

DWP024 - Deferring your State Pension says
"If you are already claiming State Pension, you can decide to stop for a while ... You can only stop claiming once"
so it would appear that DWP's interpretation is that you are considered to have stopped claiming when you have passed State Pension age even if you have not claimed.

Tbh I had my doubts about being able to do this, but is the DWP phone service usually accurate?

Looks like the only alternative is the less valuable pension top up deal.

greenglide

If you are already in receipt of SP you cannot defer but you can "de-retire".

I thought that you could have one period of deferment and one period of de-retirement or potentially two periods of de-retirement.

Having more than one period must be unusual though!

mgdavid

deleted as post #4 describes it better.

SeekTruth

See https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/299286/dwp024-apr-14.pdf:

This states, on pages 49/50:

"Do separate periods of putting off claiming State Pension link up?

No. If you put off claiming your State Pension when you reach State Pension age and you then decide after claiming it that you want to stop claiming it for another period, then the two periods of time will be treated separately. This means that if you put off claiming your State Pension for less than 12 months the first time, you would only be able to get extra State Pension for that period. You would need to stop claiming for 12 months or more the second time to be able to get a lump-sum payment. If you put off claiming your State Pension for less than 12 months, you will not have the choice of a lump-sum payment."

kidmugsy

SeekTruth has it right: you can indeed "defer" a second time - it might all be clearer if the mugs had chosen to refer to the second time as "suspending" when they wrote their bumf. Your source at the DWP is simply wrong. I faced a somewhat mulish reluctance when I wanted to "defer" after drawing for a while: my interlocutor had evidently not met such a case before. I suppose you could ask to speak to a supervisor. I just relied on my golden tongue, though.


P.S. I found that you can also face reluctance if you want your pension weekly rather than four-weekly. You just have to dig your heels in.

greenglide

kidmugsy wrote: »

P.S. I found that you can also face reluctance if you want your pension weekly rather than four-weekly. You just have to dig your heels in.

The default periodicity is four weekly because of the cost involved in issuing weekly payments (BACS and bank charges, IT costs issuing extra five million payments per week and the cash flow of weekly payments in arrears rather than four weekly in arrears). Pension Service staff will need a justification for the weekly periodicy.

Weekly payments by DP (i.e. BACS transfer) was only introduced as part of the process to replace weekly order book. It was never meant to pay new claims by weekly DP. It seemed a daft idea at the time and it was!

kidmugsy

greenglide wrote: »

The default periodicity is four weekly because of the cost involved in issuing weekly payments (BACS and bank charges, IT costs issuing extra five million payments per week and the cash flow of weekly payments in arrears rather than four weekly in arrears).

So sod the pensioners who might find that weekly suits them far better. We certainly do.

And why, for God's sake, four-weekly rather than monthly? On your reasoning it's more expensive to do 13 times a year rather than 12, and yet for many pensioners it must be less convenient - it certainly would be for us. Brilliant - poorer service at greater cost.

mgdavid

greenglide wrote: »

....... Pension Service staff will need a justification for the weekly periodicy........!

Really?
- where does it say that?
- do you have any examples of what would constitute 'justification'?

Uncle_Stinky

I have since noted from DWP024 page 20:

"What counts as ‘weekly State Pension’ if I
put off claiming State Pension?

... It does not include:
• any extra State Pension you have previously built up by
putting off claiming your State Pension"

This also suggests that one can stop claiming/defer/suspend the State Pension more than once.

The lady Auntie Stinky spoke to on her first call simply said that suspending her pension was not possible.
On her second call the gentleman I spoke to after being passed on to by Auntie Stinky unfortunately said that he was not familiar with DWP024 and that not claiming the pension counted as deferring and that one could only do that once, because "they were the rules".

It looks as if we will have to go down the supervisor route tomorrow (I lack Kidmugsy's golden tongue -- more of a foul mouth myself!)

I will post how we get on.

greenglide

Uncle_Stinky wrote: »

"What counts as ‘weekly State Pension’ if I
put off claiming State Pension?

... It does not include:
• any extra State Pension you have previously built up by
putting off claiming your State Pension"

What that means is that you cannot get increments (the "increase" you get for deferring or de-retiring) on increments. So you can de-retire after starting to receive SP and you can de-retire after having deferred and started to receive SP.

However any deferment or de-retirement only earns extra money on the basic entitlement (basic pension, AP and GRAD) and not on any increments already earned. You "may" earn increments on inherited increments (from ex-spouse) but DWP may not have considered that.

However the rules definitely allow what you want - defer, claim and paid for a period including increments, de-retire, claim again (re-retire?) and get further increments.

greenglide

kidmugsy wrote: »

So sod the pensioners who might find that weekly suits them far better. We certainly do.

And why, for God's sake, four-weekly rather than monthly? On your reasoning it's more expensive to do 13 times a year rather than 12, and yet for many pensioners it must be less convenient - it certainly would be for us. Brilliant - poorer service at greater cost.

The pensions service "prefers" to pay SP four weekly but it never "forces" people to do so except, of course, if people don't know that it is available.

SP has always been a weekly benefit paid in whole weeks. Generally having entitlement for just one day in any week qualifies you for the whole week (there are some exceptions to this). The official rates are in weekly rates, they always have been. While most working age benefits are daily benefits (so you can get odd days, rate changes in the middle of the week etc SP is not, largely because it is a "long term" benefit (once you qualify you always qualify) so whole weeks "makes sense". The regulations around the benefit do not, currently, allow for it being paid monthly and I don't suppose it will change any time soon.

The Single Tier Pension will almost certainly be a weekly benefit as well (at least in the early days). Nothing like progress!