State Pension and Working

Steve_666_

I'm using my current companies pension scheme, I will increase the gross payment by 200x52/12 per month from my salary. This may move me below the 40% tax band, but then it will help on the company car charges...

Steve_666_

My assumption is that the deferment increase is applied to the basic state pension and the contracted in (SERPS), is that correct, the SERPS portion also gets the percentage increase?

xylophone

I'm approaching eligibility for the state pension, for easy of calculation say £200 per week. 

 the basic state pension and the contracted in (SERPS),

You no longer have BSP and SERPS (Additional State Pension) as such.

If we assume that your State Pension Forecast shows entitlement to £200 a week, you have a full New State Pension (£185.15)  and a "Protected Payment" of £14.85.

This indicates that at 6/4/16 (introduction of NSP), your  "starting/ foundation" amount (higher of the amounts calculated as below), was  greater than a full NSP.

Old Rules

NI years/30 x £119.30 (Full Basic) + (Additional State Pension - (if applicable) Deduction for Contracting Out).

New Rules

NI years / 35 x £155.65 (Full NSP) - (if applicable) Contracted Out Pension Equivalent.

Since that date, your NI contributions have not increased the amount of NSP.

Your full NSP has been revalued under the "triple /double lock" and your PP by CPI.

If you draw your SP as soon as you become eligible, you will receive your £200 a week and then next April, the full NSP portion will increase under "triple lock"  and the PP by CPI.

See below.

https://techzone.abrdn.com/public/pensions/Tech-guide-new-state-pension#anchor_5

As things stand at the moment, since it appears that CPI will be the highest of the three triple lock factors, both the full NSP and the PP will increase by CPI.

Regarding deferment of NSP see

https://www.litrg.org.uk/tax-guides/pensioners/what-state-pension-deferral

If you reach state pension age on or after 6 April 2016

If you defer claiming, you may get extra state pension when you decide to claim it.

You can earn extra state pension at 1% of the weekly pension for every nine weeks you put off claiming. You must put off claiming for at least nine weeks to get extra state pension.

For example, if you defer your state pension of £100 for the minimum period of nine weeks, your state pension would go up to £101 a week from week ten when you start to take it.

The extra pension will be paid with your normal state pension and taxed in the usual way, as explained below.

Steve_666_

think I need to simplify this, I'm trying to understand which is better, not get any actual figures

assumptions:

pension £200 pw, no increase, no growth in pension contributions, nbr of weeks of deferment 54 weeks

money into pension is 54x200=£10800

pension uplift is 54/9 6%

calc:

6% of 200 is £12, so deferred pension increase is £12pw, 12x52=£624 per year.

So could I buy an annuity with my pension additions of 10800 greater than £624?

now I know smaller sums are penalized, but it would be part of a larger sum,

from the H&L website, I would get nearer 7%, so using 7% of 10800 is £756

and a 3% escalating annuity would be about 5%, so using 5% of 10800 is £540

on this basis of this crude calc, I'm still unsure which will be better. I know CPI is about 10% today, but the hope is that it will fall back to the target 2% in the next year or 2....

Ganga

Also if the rules have not changed since i retired in 2016 ,you stop paying Nat Insurance when you reach your state pension retirement age .