DWP exact and full details of how a deferred pension is calculated.

paulshears

Why, after over a decade of confusion by deferred state pensioners on the exact and full details of how the DWP calculate a deferred pension, does the information not exist anywhere?
This should include full detailed disclosure on:
1. The process involved regarding compound growth.
2. The factoring in of any contracting out amount.
3. The factoring in of any remaining full National Insurance payments, including any made after April 2016.

I cannot see why all of this cannot be incorporated in a simple Excel spreadsheet, backed up with a simple written description of why the spreadsheet is structured the way that it is.

This should include some full examples of compounding over several years and should include both the ability to enter the agreed government pensions increase in a particular years and both the pre 2016 10.1%, and post 2016 5.8%, deferred pensions increase and exactly how they interact.
All the deferred pensioner would then need to do is to obtain and enter the data relevant to their own situation.

Even if the deferred pensioner could not do this for themselves, they might be able to find someone else to do this for them.
This would save the DWP from being contacted by deferred pensioners.
The deferred pensioner would then be in a position to assess for themselves whether they can afford to retire. 

Linton

The calculation of a deferred state pension is very simple

The 10.4%/5 8% is not compounded, it is simple interest based on 1% for 5 weeks/ 1% for 9 weeks giving a factor which is multiplied by the SP you would have got if you had not deferred.

Dazed_and_C0nfused

How does a partial period of 9 weeks get factored in after at least an initial 9 weeks have passed

For example after deferring for exactly 52 weeks (post 2016) do you actually get 5% or 5.8%.  

Linton

Dazed_and_C0nfused said:

How does a partial period of 9 weeks get factored in after at least an initial 9 weeks have passed

For example after deferring for exactly 52 weeks (post 2016) do you actually get 5% or 5.8%.  

It appears to be pro rata in terms of weeks.  Hence for the pre 2016 SP it is defined as 1% per 5 weeks but usually quoted as 10.4% for a year.   Similarly 1% for 9 weeks post 2016  is quoted as  "just under 5.8% per year".  The exact figure is 5.77778%.  How this works for 53 week years I dont know but would assume that it is worked out on the number of weeks.

You dont need to go down to days since people have a fixed day of the week when they are due their SP so they cant defer for say 100 weeks and 2 days.

Marcon

Dazed_and_C0nfused said:

How does a partial period of 9 weeks get factored in after at least an initial 9 weeks have passed

For example after deferring for exactly 52 weeks (post 2016) do you actually get 5% or 5.8%.  

See https://www.gov.uk/deferring-state-pension/what-you-get

If you reach State Pension age on or after 6 April 2016

Your State Pension will increase every week you defer, as long as you defer for at least 9 weeks.

Your State Pension increases by the equivalent of 1% for every 9 weeks you defer. This works out as just under 5.8% for every 52 weeks.

paulshears

But you must get the government agreed increase for any particular year as well or if you deferred for a year when the government agreed increase was 10.1%, then you would not only lose a years pension income, you would get a smaller pension if you drew it after 12 months than if you had drawn it to start with. 
The DWP complaints people have confirmed to me (verbally) that this is the case a couple of weeks ago.  

paulshears

What the DWP complaints handler told me two weeks ago, was that, for example, 10.1% increase agreed by the government for April 2023, would be applied and then the 5.8% increase would be applied to the total, including the 10.1% increase, for that year. 

paulshears

Steve Webb remarks in one of his blog statements that any deficiency in NI contributions due to a person being contracted out, which would thus reduce their state pension, can be compensated for by yet more NI contributions. 
If this is the case, I have been unable to find any other reference to it. 
After three months of trying, I have been unable to get a pension estimate out of the DWP, let alone a clear explanation of how it is calculated. 
I note that one woman last year had been trying to get the same information from the DWP for five months to no avail. 

paulshears

Then, of course, you need to factor in the additional state pension. This was guaranteed to be retained for those people previously building entitlement to it. Again my previous DWP pension estimates factored this in, but I do not know exactly how. Some of you may be aware of the recent freedom of information request reported in the press wherein a number of deferred pensioners stood to get over £28,000 per annum as a result of deferment for a number of years. This is not difficult but it is certainly more complicated than just adding 1% per nine weeks for post 2016 deferrals. That is just one element of the total figure to be calculated. This is, the DWP complaints people have informed me, partly why they tell people that it now takes them ten weeks to work out a deferred pension estimate. If only they were really that quick.

Linton

I have checked my SP figures since I stopped deferring in 2020.  As I reached SP age before 2016 it was based on a pension determined under the old rules, but I would be very surprised if the deferral process process has changed for the New SP, except for the disappearance of Additional SP.

1) When you resume your SP you are sent your SP entitlement for that year (COD=Contracted Out Deduction)
    Basic SP:  £aaa/week
    Additional SP (SERPs etc)  - COD:  £bbb/week

2) This is followed up by a statement including the deferral factor
  Basic SP: £aaa/week
  Additional SP - COD: £bbb/week
  Extra Basic SP: £ccc/week
  Extra Additional SP: £ddd/week

The ratios ccc/aaa and ddd/bbb are the same and correspond to the number of weeks deferred

3) In the following year the SP statement shows the figures from (2) with the Basic increased by the triple lock and the Additional and Extra payments increased by CPI.  

So pretty straightforward.

paulshears

I never received any of the information that you refer to, including a letter containing my state pension entitlement.
I do not even know what my estimated state pension was on the date that I became eligible to draw it.
I never knew that this information was going to be removed from the DWP web site records until after they actually did so several years ago.
I have never received anything in writing from the DWP including any letter or Email informing me that I can draw my pension.
The last time I ever got anything relating to my personal estimated state pension was perhaps five years ago, and that, like all previous communications, was during a phone call to them.
The DWP cannot even tell me what my estimated pension was at my state retirement date. 

In addition I have a follow up, telephone number for the use of current or recent complaints which, as far as I can see, is not published anywhere. 
This number will never be answered by a human being because that is the official DWP process.
The recorded message on that number, informs the caller that they must leave their name, national insurance number and telephone number plus any reference number if the caller has one.
It goes on to say that if the available information is not provided then they will not return the call and that if it is, they will return the call within 24 hours. 
I have no reference number, but I have stated this in the message that I leave and I provide the name of the person handling my complaint. 
I provide the other three pieces of required information. 
I repeat the above process every 48 hours. 
I have never received a return call as a result of the messages that I continue to leave. 
I am aware of at least one other person who has been trying to make some progress and in her case, the last that I heard, she had completely failed to get anywhere after five months of trying. 
Given the extensive painful history of this matter, which mirrors the lady that I refer to above, I am expecting the DWP to apologise and say that I have been misinformed in some way.