State Pension Top Up

kidmugsy

Be_Happy wrote: »

In our situation OH is 85 and in poor health, while I am 68 and, so far, in good health.

If your capital or income permit, you could also consider deferral for yourself if your tax position makes it attractive. Come to think of it, you might like to check how much of his extra income you'd inherit if he did a deferral. If that turned out to be 100% then there's another attractive ploy, if you can afford it. Since he's got an occupational pension he's presumably a taxpayer, and I don't know that you are, so it might even more effective for him to defer than for you to do it.

uk1

jamesd wrote: »

Yes, pro-rated for partial years.

You wrote earlier that she became 65 a few weeks ago. This means that with the 18 month time span for the offer being available she could wait for one more birthday before buying the extra £25.

At 65 now she'd pay £934 per Pound of extra income before the 10.4% increase, dividing by 1.104 to allow for that gets her to £846.01 per Pound if buying now.

If she was to wait until aged 66 she'd pay £913 per Pound.

Given her age and her recent birthday (so I can approximate as a whole year to the next birthday, a full 10.4% increase) it appears that promptly buying the class 3A beats waiting until after her next birthday.

This wouldn't be true if she was a lot closer to her next birthday. If she was say 3 months away the £934 cost per Pound would be reduced to £934 / (1 + 0.104*3/12 ) = £914.97. That's more than the £913 cost of waiting until next birthday so if she was within three months waiting would be the better choice.

Many thanks, please forgive continued thickness, but doesn't your projection also ignore that if I purchased her full whack today and took the 10.4% in exactly a year .... the 10.4% then also increases by the CPI ... and doesn't that nudge buying it now and deferring even better marginally the better option over time?

uk1

kidmugsy wrote: »

If your capital or income permit, you could also consider deferral for yourself if your tax position makes it attractive. Come to think of it, you might like to check how much of his extra income you'd inherit if he did a deferral. If that turned out to be 100% then there's another attractive ploy, if you can afford it. Since he's got an occupational pension he's presumably a taxpayer, and I don't know that you are, so it might even more effective for him to defer than for you to do it.

Yes, I am deferring for at least a year, and my wife is already from recall three years into deferral. I plan to continue deferring both of us annually until I decide not to. This might be a few more years.

jamesd

uk1 wrote: »

doesn't your projection also ignore that if I purchased her full whack today and took the 10.4% in exactly a year .... the 10.4% then also increases by the CPI ... and doesn't that nudge buying it now and deferring even better marginally the better option over time?

Yes, that nudges it further into buying now and even deflation wouldn't change that because of the triple lock.

Be_Happy

Thanks kidmugsy

I've considered deferring (again) but seem to have come up against a problem that hasn't been mentioned yet. Inheritance of deferred extra pension has a limit whereas inheritance of state pension top up doesn't. Our combined amount at present would be £146 and the limit this year seems to be £164, so careful thought required.

I note below the wording of the Gov. publications on Deferring and Top up:

[FONT=&quot]STATE PENSION TOP UP[/FONT]
[FONT=&quot]There is a maximum amount of additional State Pension that can be paid to a surviving spouse or civil partner when both their own additional State Pension and any inherited additional State Pension are combined. However, State Pension top up will not be included when the maximum amount payable to your surviving spouse or civil partner is worked out. This means that they will receive the full inheritable amount of your top up (and any State Pension top up of their own) regardless of whether the cap applies.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]DEFERRING STATE PENSION[/FONT]
[FONT=&quot]How much extra state pension or lump-sum payment will I inherit if my husband, wife or civil partner dies? There is a limit to the amount of additional State Pension (State Second Pension and SERPS) you may get. (This would be by combining your own additional State Pension and any additional State Pension you inherit.[/FONT]