query ref old State Pension deferral

maximumgardener

My brother in law posed this query at weekend....
he retired age 65 in March 2015 and receives £1104 every four weeks for his state pension (which incidentally I thought was very good!)
anyway .....query surrounds "is there any point in further deferral" ?
old rules would pay 10.4% pa if applicable
..."is there a maximum amount payable " ?

he never contracted out and has 47 years full NI.
he still works part time whilst drawing SP.

any pointers much appreciated

bigfreddiel

Yes he should improve his sp by 1% every 5 weeks of deferral, or 10.4% per year. And even if you start taking it you can choose to stop, wait a year, or longer and receive a 10.4% increase each year, nice innit!

archie17

I understand there is a maximum, and I think it is close to 290 per week. That is £1160 per four weeks.
I am in a similar position and think it will soon be time to take my SP.
I keep meaning to phone the Pension Service but the thought of the queues is preventing me!!!!!

I hope someone can answer this with some authority.

jamesd

For the 2015-16 tax year the maximum additional state pension, increased by deferring, was £164.36 a week. That's on top of the basic state pension that for 2016-17 is £119.30. So a total of £183.66 a week plus the increase in additional for this year. Over four weeks that is £1134.64. That's 2.78% more than he's getting now. So it appears that ten or fifteen more weeks of deferral would take him to the maximum.

Since he's so close to the limit he should contact DWP and ask them to confirm the current maximum and how many weeks of deferral it would take to get to that maximum.

archie17

Dear Jamsed
Your link to the max additional state pension is from the Northern Ireland web site, is this relevant to the rest of the UK?
Just seems odd that it is not also covered by the "main" gov website.
For me I have to wait for just over a year.

Linton

The only information on maximum additional pension I can find is in relation to the standard non-deferred pension and could appear to be simply a statement of fact rather than principle. Neither the web pages on deferral nor the PDF Additional Information sheets appear to give any exceptions to the 10.4% uplift on the whole of the combined basic and additional pension. Does anyone have a reference?

greenglide

There is a maximum amount of AP which can be earned as the link to the NI site states. The rules covering this are identical for GB and NI.

However, it has always been my belief that the maximum AP referred to the amount actually earned from SERPS / S2P (and inherited amounts) but that increments from deferral did not count towards this.

Otherwise many people who had significant AP already or who were already at the maximum would have a problem as they would either lose part of the increments or be forced to take the lump sum (old rules only).

There is no mention of a maximum amount of increments for deferral in the DWP guide - surely they would have to mention this?

maximumgardener

Thanks for all the comments thus far.
looks like a deferral for 10 weeks will get him close to the max of £283.66 /week
(within 1%, so pretty good)

kidmugsy

jamesd wrote: »

For the 2015-16 tax year the maximum additional state pension, increased by deferring, was £164.36 a week.

jamesd, does that limit include any additional state pension inherited from a dead spouse, and indeed the additional pension fraction of extra pension inherited too?

greenglide

does that limit include any additional state pension inherited from a dead spouse

We have to establish whether the increments for deferral are subject to this limit in the first place.

There no be no limit for nSP increments for deferral as there is no concept of maximum AP to compare it against any more.

I would be gobsmacked if this limit was true.

greenglide

So the Social Security Contributions and Benefits Act 1992 says:-

(2) The rate of the person’s Category A or Category B retirement pension shall be increased by an amount equal to the aggregate of the increments to which he is entitled under paragraph 2, but only if that amount is enough to increase the rate of the pension by at least 1 per cent.]

There are then many paragraphs of complexities but nothing, which I can see, that limits the amount payable.

Subsequent amendments in Pensions Act 2005 and Pensions Act 2014 do not add any maximum.