State pension general questions & Advice

spoog

greenglide wrote: »

It is generally believed that taking the lump sum rather than getting pension for the rest of you life is a "bad idea".

My understanding is that if she takes the lump sum (for the deferred 4 years +) - she will still get her usual weekly pension from when the claim goes through, but not at the increased rate (hence taking the lump sum) - but she will still get her regular weekly pension afterwards.

Her view is basically that she would rather take a lump sum and make use of it now, than just getting an increase.

spoog

Ganga wrote: »

If your mother has not claimed her state pension for 4 years and 2 months and she was to receive approx. £119.00 per week she would be entitled to £119.0 x 216 weeks - £25704.00 x 2.5% -£642.60 total £26346.60 approx. some of the more learned pollsters will be able to give you a more exact figure

Thanks for the reply! I worked it out to around £25k myself, but I'm not the best at math and I may have missed something out too. (so im probably more likely to believe what you wrote or someone else!). Although i did calculate mine at the rates of each year in the last 4 years. (so maybe why I come a little lower than your calculation).

atush

She may want the lump sum but if she has other savings then i would strongly advise she reconsiders.

unless you are/she is of poor health, it is likely that boosting her pension by over 40% per annum index linked, would be of far better use over the long term.

spoog

Yeah i can understand the point about considering the options and that not taking the lump sum can work out better in the long term.

But she has already made up her mind and would rather make good use of the lump sum while she can (she has plans for a large portion of it) - but still get her regular pension , in her eyes is the preferred choice.

greenglide

Her view is basically that she would rather take a lump sum and make use of it now, than just get an increase for however long, when she would still get her weekly pension anyway.

You need, at least, to look at just how much extra pension she would be entitled to.

Look here https://www.gov.uk/deferring-state-pension/what-you-may-get

You get the full State Pension of £119.30 a week.

Your basic State Pension will be £6,203.60 a year.

By deferring for a year, you’ll get an extra £645 a year (£12.40 extra a week).

For a deferral of four years someone with an entitlement of £119 would get an extra £49.60 every week, index linked, for the rest of their life.

Does she realise what she is turning down?

spoog

Yeah Ive already explained to her about the increased payments option - that taking the lump sum payment isn't as good a deal over time.

She's still quite insistent that she would prefer the lump sum and is happy just to get the regular £119 per week afterwards.

I'll speak to her again tomorrow just to explain again that the increase works out better and could be of more value to her - but shes usually quite set on what she wants and decides - and is already set on the lump sum.

I think in her view though, it will be a case of, id rather do what i want now with it, than thinking years to come - when no one knows how long you may or may not be around. She's the kind to want to live now. But i'll speak again tomorrow and make sure she's as informed as she can be before the decision has to be made.

greenglide

At the end of the day it is, of course, her decision and if she has things she wants to do with the lump sum that makes sense.

We do see people on here who want the lump sum just to put into the bank as savings for a rainy day which is generally a bad idea.

spoog

Yeah, i totally understand where your advice is coming from and does make sense in a way about the increased payments.

She won't be putting it in a bank just to sit there anyway - i know that much She does have things she wants to do and sort out - so in her head she would rather do that now. But as you say, its hers (or anyone else in that position) to decide - I've just tried to help her understand and sort it out for her best i can.

Thanks again for all the advice and comments anyhow.

Mojisola

greenglide wrote: »

For a deferral of four years someone with an entitlement of £119 would get an extra £49.60 every week, index linked, for the rest of their life.

Does she realise what she is turning down?

I'm usually in favour of keeping the increased weekly pension but, if the OP's Mum doesn't have much in the way of savings and no other income, her £119 will be topped up by Pension Credit to £155.60 (on current figures - who knows what the future will bring).

PC is a passport benefit -
"Here are 6 perks of claiming Pension Credit:

It’s unlikely you’ll have to pay Council Tax (unless other people live with you).
You’ll get free NHS dental treatment, and you can claim help towards the cost of glasses and travel to hospital.
You’ll get a Cold Weather Payment of £25 when the temperature is 0°C or below for 7 days in a row.
If you rent your home, you may get your rent paid in full by Housing Benefit.
If you own your home, you may be eligible for help with mortgage interest, ground rent and service charges.
If you’re a carer, you may get an extra amount known as Carer Premium, or Carer Addition if it’s paid with Pension Credit. This is worth up to £34.60 a week."
http://www.ageuk.org.uk/money-matters/claiming-benefits/pension-credit/the-perks-of-getting-pension-credit/

Alter_ego

Mojisola wrote: »

I'm usually in favour of keeping the increased weekly pension but, if the OP's Mum doesn't have much in the way of savings and no other income, her £119 will be topped up by Pension Credit to £155.60 (on current figures - who knows what the future will bring).

PC is a passport benefit -
"Here are 6 perks of claiming Pension Credit:

It’s unlikely you’ll have to pay Council Tax (unless other people live with you).
You’ll get free NHS dental treatment, and you can claim help towards the cost of glasses and travel to hospital.
You’ll get a Cold Weather Payment of £25 when the temperature is 0°C or below for 7 days in a row.
If you rent your home, you may get your rent paid in full by Housing Benefit.
If you own your home, you may be eligible for help with mortgage interest, ground rent and service charges.
If you’re a carer, you may get an extra amount known as Carer Premium, or Carer Addition if it’s paid with Pension Credit. This is worth up to £34.60 a week."
http://www.ageuk.org.uk/money-matters/claiming-benefits/pension-credit/the-perks-of-getting-pension-credit/

Just a thought, Would the 26k lump sum prevent a pension credit claim?