State Pension

wkt54

So I have to live until I'm 82 to make up the lost 7500 pounds?
I could die when I'm 67.
Can't really see the point of deferring the pension then, when I can receive 150 pounds a week from when I am due it.

noitsnotme

Or you could live until you’re 100 🤷‍♂️  It’s a judgement call only you can make.

elvis1835

My state pension is due, but i do not have a fixed address, i have a c/o address and a bank account. Can i still claim my pension. Got 48 full years contributions

Linton

wkt54 said:

So I have to live until I'm 82 to make up the lost 7500 pounds?
I could die when I'm 67.
Can't really see the point of deferring the pension then, when I can receive 150 pounds a week from when I am due it.

1) Assuming you are in average health you are more likely to live to 100 than die in the next 2 years.
2) The SP you gain is inflation linked, so the payback age is less than 82.
3) Deferring SP and taking the missing income from your savings is equivalent to an inflation linked annuity rate of 5.8%.  Given that commercial annuity rates for someone aged 65 are a bit less than 3% this seems a pretty good deal.

xylophone

My state pension is due, but i do not have a fixed address, i have a c/o address and a bank account. Can i still claim my pension. Got 48 full years contributions

https://www.gov.uk/get-state-pension

xylophone

Can't really see the point of deferring the pension then, when I can receive 150 pounds a week from when I am due it.

Are you able to improve your pension ?

https://www.royallondon.com/siteassets/site-docs/media-centre/good-with-your-money-guides/topping-up-your-state-pension-guide.pdf

Tassie_Devil

wkt54 said:

I am due 150 pounds a week on 15 November this year.
So if I defer it for one year, at 5.8% interest, in November 2021 I will be receiving 158.80 ponds a week, and lose 7,500 pounds?

Alternatively you can claim it within one year of becoming entitled to it and backdate your claim to the date of entitlement. That way, you get a lump sum of the backdated amount and your pension then carries on as usual.

wkt54

Thank you Tassie_Devil.
That sounds a much better plan.

pensionpawn

One issue to consider before delaying taking your state pension. Your state pension stops when you die and can't be passed to family, your personal pension(s) can. If you are no longer in employment why erode your personal pension (future estate) more than necessary (and reduce your personal pensions growth potential)? For example, a couple who both started their state pension this year will be receiving ~ £18k tax free (if no other income). Not a fortune however neither poverty. One of the couple decides to defer their state pension 5 years, using their personal pension instead. If they had a personal pension of £100k after 5 years that is will now be worth around £80k at a growth figure of 8%. That person sadly dies shortly after starting to draw their increased state pension. The surviving partner now has £80k passed to them to add to their standard state pension. Had they not elected to defer one of their state pensions the personal pension passed to them (if not accessed) would now be worth around £147k! 

Some will argue that if you continue to receive income post their state pension age then that is the trigger to defer taking it. I would argue that it may be better to continue to take your state pension and continue to pay into your private pension, (until 75) via salary sacrifice or SIPP. Certainly SS if your income plus state pension makes you a tax payer. That way you could effectively receive a 20% uplift on (part / all of) your state pension in addition to boosting your personal pension (to pass on).

I can't see a reason to defer. I just need two more qualifying years (realistically one as I've probably just met this years threshold) and will want my SP as soon as I can get it, which is presently 67 for both me and my wife.

The example above uses a lot of assumptions, however only to illustrate that deferring the state pension needs to be thought through. In fact I would like to see the reverse of deferral and let people (which would also cushion the blow for Waspi's) to take their pension earlier than SP age by reducing the pension payments in line with the formula for increasing them. With the pension age being pushed further up, some sectors of society may not live long enough to start claiming their hard earned pension. Perhaps that's the plan...

nigelbb

pensionpawn said:

One issue to consider before delaying taking your state pension. Your state pension stops when you die and can't be passed to family, your personal pension(s) can. If you are no longer in employment why erode your personal pension (future estate) more than necessary (and reduce your personal pensions growth potential)? For example, a couple who both started their state pension this year will be receiving ~ £18k tax free (if no other income). Not a fortune however neither poverty. One of the couple decides to defer their state pension 5 years, using their personal pension instead. If they had a personal pension of £100k after 5 years that is will now be worth around £80k at a growth figure of 8%. That person sadly dies shortly after starting to draw their increased state pension. The surviving partner now has £80k passed to them to add to their standard state pension. Had they not elected to defer one of their state pensions the personal pension passed to them (if not accessed) would now be worth around £147k! 

Some will argue that if you continue to receive income post their state pension age then that is the trigger to defer taking it. I would argue that it may be better to continue to take your state pension and continue to pay into your private pension, (until 75) via salary sacrifice or SIPP. Certainly SS if your income plus state pension makes you a tax payer. That way you could effectively receive a 20% uplift on (part / all of) your state pension in addition to boosting your personal pension (to pass on).

I can't see a reason to defer. I just need two more qualifying years (realistically one as I've probably just met this years threshold) and will want my SP as soon as I can get it, which is presently 67 for both me and my wife.

The example above uses a lot of assumptions, however only to illustrate that deferring the state pension needs to be thought through. In fact I would like to see the reverse of deferral and let people (which would also cushion the blow for Waspi's) to take their pension earlier than SP age by reducing the pension payments in line with the formula for increasing them. With the pension age being pushed further up, some sectors of society may not live long enough to start claiming their hard earned pension. Perhaps that's the plan...

This is what happens in France you can take your pension at a reduced rate from age 62 & receive full rate pension at age 67. There are also other circumstances where you get full pension earlier than 67 if you worked in a particularly tough occupation like fishing or farming & currently when you have contributed for 167 quarters ie working life of just under 42 years.