State Pension deferral - incorrect result ?

Alter_ego

greenglide wrote: »

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!

Will that apply to my case? I deferred 7 years after claiming (and drawing) my SP.

I was anticipating the amount being based on my pension at deferral.
Basing it on the pension when I reclaim will be a bonus. Also it will influence when I reclaim,I guess 7th April will be most favourable, subject to the 5 week rule.

Alter_ego

LXdaddy wrote: »

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

Have you got a reference or a link for that. Not doubting you but would love it to be true.
See my last post #32

uk1

greenglide wrote: »

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!

I have relooked at the illustration in the DWP pdf document. It implies in the calculation (as far as I can make sense of it) that it breaks the 1% down into weeks unless I have misunderstood it.

Please relook at it and see if you agree. I've pasted it below.

Example – Extra State Pension


Ann reached State Pension age in 2011 and decided to
put off claiming her State Pension. She starts claiming it
from May 2013. On the date she claims, her weekly State
Pension (before we add any extra State Pension) is £120.
Ann has put off claiming for 100 weeks. This means she
is entitled to an extra £24 a week on top of her £120. We
have worked this out as follows.

For every five weeks she put off claiming, we pay Ann
1% of the weekly pension she would have been receiving
during that time. To work out Ann’s extra State Pension for
each year she put off claiming, we divide this 1% figure by
five. In Ann’s case this is:

£120 divided by 500 = £0.24 (500 is 1% of Ann’s State
Pension for every five weeks she put off claiming).
£0.24 x 100 (the number of weeks Ann put off claming) =
£24

Ann will get a total State Pension of £144 a week when she
claims. This is made up of her £120 a week State Pension
plus her £24 a week extra State Pension

What they have done in this calculation is taken the pension she would get on the date she defers ie £120, and then calculated that for every week she has waited she should get 24p and then multiplied the 24p by the 100 weeks she has waited. Coincidentally, 100 weeks is exactly divisible by 5 but they could have just as easily multiplied it by 99 weeks imho. That would have given her a total pension of 24p less ie £123.76p. My translation!

This calculation to me seems therefore to break the denominator into weeks not five week chunks ....but what do I know!


Jeff

greenglide

This calculation to me seems therefore to break the denominator into weeks not five week chunks

not if you work out how many 5 week chunks there are and from that decide what the date to claim from should be so you don't lose any!

LXdaddy

Alter_ego wrote: »

Have you got a reference or a link for that. Not doubting you but would love it to be true.
See my last post #32

Yes in the document "Deferring Your State Pension 2015" the example for "Ann"

Ann reached State Pension age in 2011 and decided to
put off claiming her State Pension. She starts claiming it
from May 2013. On the date she claims, her weekly State
Pension (before we add any extra State Pension) is £120.
Ann has put off claiming for 100 weeks. This means she
is entitled to an extra £24 a week on top of her £120. We
have worked this out as follows.

The Bold section makes it clear that the start point is "on the date she claims"


If the 1% per 5 weeks was added to your pension on the date you deferred then you would miss out on all the triple locked increases in the period of deferral.

LXdaddy

uk1 wrote: »

...What they have done in this calculation is taken the pension she would get on the date she defers ie £120, and then calculated that for every week she has waited she should get 24p and then multiplied the 24p by the 100 weeks she has waited. Coincidentally, 100 weeks is exactly divisible by 5 but they could have just as easily multiplied it by 99 weeks imho. That would have given her a total pension of 24p less ie £123.76p. My translation!

This calculation to me seems therefore to break the denominator into weeks not five week chunks ....but what do I know!


Jeff

Unfortunately Ann's example is exactly 100 weeks of deferral so does not give any insight to the question is it only worked out on 1% per complete 5 week deferral or is it 0.2% per complete week of deferral or 1/35% per day of deferral.


It would have been more interesting if the example had a deferral of either 99 weeks or 104 weeks.

uk1

LXdaddy wrote: »

Unfortunately Ann's example is exactly 100 weeks of deferral so does not give any insight to the question is it only worked out on 1% per complete 5 week deferral or is it 0.2% per complete week of deferral or 1/35% per day of deferral.


It would have been more interesting if the example had a deferral of either 99 weeks or 104 weeks.

But it clearly calculated the amount payable in weekly chunks not 5 weekly chunks.

uk1

greenglide wrote: »

not if you work out how many 5 week chunks there are and from that decide what the date to claim from should be so you don't lose any!

Yes, you are contorting the calculation they actually made rendering no need to fix the date in the way you describe.

If it were for every 5 week chunk then the illustration would have been easier to produce and understand and they would have said "you get 1% for each completed 5 week period of deferral" instead of taking the more unclear option of illustrating the single weekly deferral value which theynthen multiplied.

To me it seems that you are unwilling to consider this explanation even though there is nothing in the example that implies it is only for each 5 completed week chunk .... in fact quite the reverse in that it goes to lengths it show a weekly value.

Jeff

greenglide

To me it seems that you are unwilling to consider this explanation even though there is nothing in the example that implies it is only for each 5 completed week chunk .... in fact quite the reverse in that it goes to lengths it show a weekly value.

Not at all.

Several of the DWP sites tell it like it is, such as:-

You’ll need to defer for at least 9 weeks - your State Pension will increase by 1% for every 9 weeks you put off claiming. This works out at just under 5.8% for every full year you put off claiming.

But unfortunately they do confuse things elsewhere.

I am told, by people who do know, that this is what the legislation and, crucially, what the regulations lay down and it is how the DWP perform the calculations.

It is still madness. There is no logic in it being the way it is.

uk1

duplicate post