Defer pension till April 2016??

Laummatt

Hello all,

I'm sorry if this has been answered before....

My Mum is due to receive her state pension this year (april in think). She was born Jan 1953. She has been advised she will be getting £113, she will not be able to get pension credit - I believe - as she is still working as an adult placement carer (so the lady lives with them).
So our question is should she defer till next year when the pension changes to the flat rate of £148.50? The gov website says that it is changing so the minimum would be that amount. This is obviously quite a bit more than my Mum is currently entitled to.
Can anyone shed some light as we are finding it confusing, and her accountant hasn't been helpful....

Thanks

Laummatt

Not sure if it's important but my Dad is also still working 3 days a week he is not due his until next year.

dunroving

My understanding is that the amount you will get (i.e., whether your pension amount will fall under the new or old rules) depends on when you reach retirement age, not when you elect to start taking State Pension.

This means that deferring it a year won't bring your mum under the new "flat rate" (single tier) pension.

jem16

Laummatt wrote: »

So our question is should she defer till next year when the pension changes to the flat rate of £148.50?

No it won't make a difference. It's the date of her state pension that matters, not when she actually takes it.

The gov website says that it is changing so the minimum would be that amount. This is obviously quite a bit more than my Mum is currently entitled to.

It's not necessarily as simple as that. If your Mum is only likely to receive £113 it could well be because she has been contracted out of the state 2nd pension or SERPS as it was known. if this is the case she would not get the full £148 anyway.


Does your Mum have other pension entitlement?

xylophone

https://www.gov.uk/new-state-pension/overview

Laummatt

jem16 wrote: »

It's not necessarily as simple as that. If your Mum is only likely to receive £113 it could well be because she has been contracted out of the state 2nd pension or SERPS as it was known. if this is the case she would not get the full £148 anyway.


Does your Mum have other pension entitlement?

Thanks. I understand about the state pension age. I'm not sure what SERPS is?? She doesn'y have other pensions - some savings and her house. Like I said she's continuing to work. Dad has some pensions but they are in his name.

This is all new to us....

xylophone

It seems that your mother is entitled to a full basic state pension but she may also be entitled to some graduated pension and some additional pension.

See the section on this in the link provided.

Has your mother received a pension statement?

Triumph13

Bad news is that she can't get the new flat rate pension.


Good news is that she does qualify for the old deferral rates of 10.8% increase for each year deferred - so whilst deferring for a year won't get her to £148 it will get her to £125 (£137 if she defers for 2 years and so on) so if she can afford to defer for a couple of years and has a normal life expectancy that would be a great deal.

patanne

As Xylophone says your mother should get a pension statement as it is very unusual for someone who has worked (enough to get a full basic pension) to only have the basic state pension.

Deferring until she needs to take it is a very good deal at 10.4% for a full year (which is worked out weekly). The only negative would be if she expects not to live long or has debts she needs the pension to help her pay. Taking the lump sum is not such a good deal though.

ibizafan_2

I was born in February 1953, and reach state pension age at 62 years 10 months. I just miss out on the new flat rate pension, but because I have nearly always been contracted out, will not get the full rate. As I am still working part time and also in receipt of my main final salary pension, I am deferring for a couple of years (health permitting) to bump the final figure up a bit. My brother remains unconvinced as he would rather have the money and invest it, but I think it could work for me. My parents are in their late 80s and in good health, so I'm hoping that the figures will stack up.

Triumph13

ibizafan wrote: »

I was born in February 1953, and reach state pension age at 62 years 10 months. I just miss out on the new flat rate pension, but because I have nearly always been contracted out, will not get the full rate. As I am still working part time and also in receipt of my main final salary pension, I am deferring for a couple of years (health permitting) to bump the final figure up a bit. My brother remains unconvinced as he would rather have the money and invest it, but I think it could work for me. My parents are in their late 80s and in good health, so I'm hoping that the figures will stack up.

That makes you someone who is lucky to just miss the change - if you had been just the other side you'd have had the same amount of pension, but half the deferral increase!