Defer SP and starting rate for savings: Sense check?

polymaff

Definitely agree re: old SP. Debateable for the new SP. To me swung by the £1k pa where the case applies - but then there's the fickle finger of fate waiting to turn the client's world upside down.

I wish you a long, healthy retirement. Report back in 30 years

MK62

annaccordion wrote: »

Yes I believe that the pre 04/2016 SPa offer is a no brainer to defer if you don't need the money immediately to live on.

I've seen well respected people on here describe the new rules as (still) being a 'no brainer' to defer.

I definitely don't see it as that clear cut, even with the advantage of the unusual circumstances & under current rules that allows a £1k tax gain to defer.

I think you need to work some numbers.......you would be better off eventually, but it could take 15 years or more (depending on various factors inc. your monthly spending and how/if you make up for the income shortfall from 2 years of deferring).
Bear in mind too, that until the break even point, you are worse off.......
Admittedly, in your case, it's complicated by your relatively large savings income and the 0% starter rate on savings (the tax saving on that bringing the break even point a couple of years closer).....but even so, it comes down to a roll of the dice on longevity.

All that said, in your position it's all little more than tinkering round the edges tbh....it's not going to make all that much difference to you either way.

annaccordion

MK62 wrote: »

All that said, in your position it's all little more than tinkering round the edges tbh....it's not going to make all that much difference to you either way.

True - however much of the savings income is from a load of cumulative tinkering..

But for me this one appears to be much work & carries more risk with not enough potential gain.

I hope it's been a useful thread for others, too.

drphila

polymaff wrote: »

Irrelevant to the issue. Think about it.

I don't understand the point about inflation not being relevant. Could somebody please explain.

soulsaver

drphila wrote: »

I don't understand the point about inflation not being relevant. Could somebody please explain.

...not significantly relevant to the payback calculation... as the inflation eroded spending power of the foregone funds over the deferment period is mitigated by the RPI increases on the deferred SP amounts when eventually received (un-deferred).