State Pension deferral - incorrect result ?

LXdaddy

The quoted figure can't be taking the deferral into account.

jamesd wrote: »

The number seems to inarguably be wrong. This is because after 4.5 years of deferral you would be entitled to 1.56 times the inflation-adjusted original pension entitlement. £124.70 / 1.56 = £79.93 yet you clearly have enough years to qualify for the full basic state pension, which is higher than this.

4.5 years is 234 weeks, divide by 5 = 46.8% of extra pension.

The extra is applied to the state pension entitlement on the date of claiming, not the day of deferral.

With the basic state pension currently at £115.95 and what looks like enough NI years for a full basic pension the MINIMUM of Extra Pension would be £115.95 * 46.8% = £54.26

If the quoted £124.70 included some Additional pension for S2P or SERPS then it is likely to be an Extra Pension of £124.70 * 46.8% = £58.36 making a total of £183.06 - if you take it as extra pension each week rather than a Lump Sum.

greenglide wrote:

Actually 1% for each five weeks of deferment isn't it? Goes to 1% for every 9 weeks of deferment under nSP.

Any odd weeks on the end (period is not exactly divisible by 5 or 9) is lost.

I don't have access to the calculations but I SUSPECT that the odd weeks are not lost. You do have to defer for a minimum of 5 weeks to get any extra. But in the example in the booklet "Deferring your State Pension October 2014" the table after the "Ann" example shows

Weekly State Pension £100
Put off Claiming for 1 year
Extra State Pension £10.40 each week

so maybe it IS taking the last 2 weeks of the deferral into account.

greenglide

The legislation, the regulations and the way they award it is 1% for each complete 5 weeks of deferment any remaining weeks are ignored. They will start payment in the date that you ask them to and you can very easily lose weeks.

uk1

LXdaddy wrote: »

The extra is applied to the state pension entitlement on the date of claiming, not the day of deferral.

.

Another thing I got wrong even though I started to think I understood. I thought the 10.4% was applied to the pension that was payable on the normal retirement date rather than applied to the current pension when you actually retire.

This misunderstanding is in my favour!



Jeff

greenglide

Is it wasnt you would lose all of the index linking (including triple lock) in the calculation of the amount which could be quite substantial!

John_Pierpoint

LXdaddy wrote: »

The quoted figure can't be taking the deferral into account.

4.5 years is 234 weeks, divide by 5 = 46.8% of extra pension.

The extra is applied to the state pension entitlement on the date of claiming, not the day of deferral.

With the basic state pension currently at £115.95 and what looks like enough NI years for a full basic pension the MINIMUM of Extra Pension would be £115.95 * 46.8% = £54.26

If the quoted £124.70 included some Additional pension for S2P or SERPS then it is likely to be an Extra Pension of £124.70 * 46.8% = £58.36 making a total of £183.06 - if you take it as extra pension each week rather than a Lump Sum.

I don't have access to the calculations but I SUSPECT that the odd weeks are not lost. You do have to defer for a minimum of 5 weeks to get any extra. But in the example in the booklet "Deferring your State Pension October 2014" the table after the "Ann" example shows

Weekly State Pension £100
Put off Claiming for 1 year
Extra State Pension £10.40 each week

so maybe it IS taking the last 2 weeks of the deferral into account.

State Pension from April 2016, would be set at £155.65.

Would claiming now get the increase on (more or less) the whole enhanced weekly payment or would it make sense to wait a few more weeks and claim after the enhanced rate comes into force.?

Woops I think I must be confusing myself by anticipating the guaranteed minumum pension and the real basic rise.
The basic state pension will rise to £119.30 a week from April 2016 - anyone know the actual date of the increase ?

bowlhead99

The £155 isn't relevant as it is for people reaching retirement age in April 2016 or beyond, who are on a new scheme with a different structure.

The one you are on is basically what you would have got a few years back when you *could* have taken it, plus the relevant inflation measure, plus (your extra 10.4% times however many years( rounded down to five-week chunks))

uk1

bowlhead99 wrote: »

The one you are on is basically what you would have got a few years back when you *could* have taken it, plus the relevant inflation measure, plus (your extra 10.4% times however many years( rounded down to five-week chunks))

Sorry to be pedantic, but I'm double checking you haven't said something different to greenglide. Basically it is the state pension in the year you retire times the 10.4% for each deferred year.

Jeff

Triumph13

Just a thought triggered by your mention of maternity allowance - you weren't paying married women's reduced stamp for some of those 49 years were you?

uk1

Have I misunderstood something?

If it is 1% for every five complete weeks of deferral doesn't that mean if you defer for one year you actually only get 50 weeks of deferral paid, so it is therefore 10% for a years deferral not 10.4% as published?


Jeff

greenglide

Because as I keep saying it is periods of five weeks. If you defer for exactly a year you get 10% and lose the other two weeks.

It is "equalvelant" to 10.4% if you do multiple years.

Stupid system!