Deferred Pension "Hot Spot"?

uk1

LXdaddy wrote: »

This is really an academic debate because you will have a higher figure if you take it a week later. We are only discussing the size of the difference.

But my point is .... it is the only this week each year where the increase is a larger jump. Is that incorrect?

Jeff

LXdaddy

uk1 wrote: »

But my point is .... it is the only this week each year where the increase is a larger jump. Is that incorrect?

Jeff

In years when CPI is different to triple lock then yes the increase in this particular week will be larger than in other weeks.


If CPI is the same as triple lock (ie is the same as or higher than 2.5% and wage inflation) the increase in this week would be no different to other weeks.

uk1

LXdaddy wrote: »

In years when CPI is different to triple lock then yes the increase in this particular week will be larger than in other weeks.


If CPI is the same as triple lock (ie is the same as or higher than 2.5% and wage inflation) the increase in this week would be no different to other weeks.

So ... back to my opening post (and thereafter) this year there is a "hot spot" by taking the deferred pension on 6th April 2016 rather than the week before then.

brewerdave

The defence rests ,mi Lord:rotfl:

jamesd

uk1, to simplify a bit, it is in her interest at the moment to wait the extra week.

This is not a general rule but I think it is correct this year because I think that the 2.5% in the triple lock is above both CPI and wage inflation. So there is a bit of inflation-related gain to be had on the basic state pension part by waiting, in addition to the extra 0.2% for the extra week.

uk1

Thanks James, that is exactly as I saw it.

If I am right this would be true in any year where the CPI is declared anywhere near to zero, because the SP increase will benefit from triple lock.

Jeff

jamesd

Any year where either 2.5% or pay increases are higher than CPI.

uk1

I didn't realise that people still get pay increases .........:D

Jeff

jamesd

If you say what the split between basic and additional state pension is it'll be possible to work out the difference it makes based on how much the triple lock's 2.5% increases the basic state pension part.

uk1

jamesd wrote: »

If you say what the split between basic and additional state pension is it'll be possible to work out the difference it makes based on how much the triple lock's 2.5% increases the basic state pension part.

That's very kind. I think I have concluded that in my situation we have landed on a very simple way of deciding which date to defer both our pensions to. As to a degree I am living off a combination of previous company and personal pensions the slack taken up by sinking a significant buffer cash fund which also leaves as a further buffer a decent mortgage free second home which we will sell at some point. Many years ago I moved all our equities into what was then high interest long-term ISAs and bank accounts. Our average until a month or so back was around 4% annualy and iscurrently just over 3% but much of those rates dissapear this year. The interest at the moment means we're not depleting the capital.

I have decided therefore that philosphically the year will be when our cash buffer has reached a point at which we don't wish it to go any lower. We want to maintain a large cash buffer to stop us worrying about access to fun and holidays and the odd car, or anything unexpected. That will decide the year. Not this year maybe a few years from now or so. Then we will probably decide on it being the first week into a tax year having evaluated and balanced the income tax implications against the other considerations I questioned in this thread. This makes our decision relatively easy for us.

Thanks again for the offer and may I add for your day to day and very valuable contributions on these topics generally in all threads which I and others very much appreciate.

Jeff