Claiming deferred State Pension.......what weekly amount to expect.

peewhyeff

Female, 50 qualifying years, no contracting out.  Reached S.P. age  May 2020. Still working. Established that the full.£203.85 is due but the figures for 12months 'lump sum' and also the additional Extra S.P. keep changing,   mid June quoted  £11,084 and £22.84 ESP,  then last week quoted £10,800 and £208.60 including ESP.    Without the 'lump sum'   June quote was £240.77, last week quoted £241.45.   I can't work out entitlement,  can't trust their figures either!!  Can anyone help with the calculation?

Dazed_and_C0nfused

As you reached State Pension age after 5 April 2016 you are no longer able to claim a deferral lump sum.

Do you mean you are backdating your claim for State Pension by the maximum 12 months?

peewhyeff

Yes, the 12months....apologise for wrong terminology, that's why I used 'lump sum' in quote marks

Dazed_and_C0nfused

So you deferred for the period from May 2020 to July 2022?

Approx 110-112 weeks?

peewhyeff

Yes, if claiming the 12months.  Or deferred from May 2020 until July 2023 if decide to not claim the ' lump sum'.

Dazed_and_C0nfused

£240/week with no backdating looks about right to me.  That one will increase until you actually claim your State Pension.

The figures for backdating make no sense but hopefully some more knowledgeable will be able to comment.

Linton

If you were deferring then your subsequent SP would increase at 1% for each 9 weeks deferred which is just under 5.8% for each year.  Backdating  does not provide any increase in your SP, you merely get the SP you would have otherwise received as a lump sum. So the only benefit is to move income to a different tax year.

p00hsticks

Linton said:

If you were deferring then your subsequent SP would increase at 1% for each 9 weeks deferred which is just under 5.8% for each year.  Backdating  does not provide any increase in your SP, you merely get the SP you would have otherwise received as a lump sum. So the only benefit is to move income to a different tax year.

I'm not sure but isn't it the other way round - backdating effectively provides a decrease in your weekly SP ? 

As I understand it (and my understanding may be wrong) the two available options are::

a) You can say you wish to backdate your claim for up to a year. In this case going forward you would get the weekly amount that was applicable a year ago, plus a 'lump sum' deferred payment to represent a years payments of that amount (with annual increases as appropriate).

or b) you say you wish to start claiming your state pension now. In which case, your weekly amount will be 5.8% higher than it would  have been a year ago.

Linton

p00hsticks said:

Linton said:

If you were deferring then your subsequent SP would increase at 1% for each 9 weeks deferred which is just under 5.8% for each year.  Backdating  does not provide any increase in your SP, you merely get the SP you would have otherwise received as a lump sum. So the only benefit is to move income to a different tax year.

I'm not sure but isn't it the other way round - backdating effectively provides a decrease in your weekly SP ? 

As I understand it (and my understanding may be wrong) the two available options are::

a) You can say you wish to backdate your claim for up to a year. In this case going forward you would get the weekly amount that was applicable a year ago, plus a 'lump sum' deferred payment to represent a years payments of that amount (with annual increases as appropriate).

or b) you say you wish to start claiming your state pension now. In which case, your weekly amount will be 5.8% higher than it would  have been a year ago.

No, dont think so. The amount of SP you are due, even if you dont take it, is updated by the triple lock each year.  You dont lose out on inflation matching by not taking your SP. 

So if the SP you were due was £10500/year at the start of year 1 and you then backdated for 1 year until the start of year 2 your lump sum would be £10500 and your SP in year 2 would be £10500 increased by the triple lock. 

However if you deferred for 1 year you would get no lump sum but your SP in year 2 would be £10500 increased by the triple lock + £10500 X0.058 X increase in CPI.  You dont get the full triple lock on "Extra" SP.

peewhyeff

Differing views , as I suspected. Seems like as members of the public  we all look at it differently. How are we supposed to understand how D.W.P work out the figures,  even they can't be  consistent. Confidence in the D.W.P. is zero.

Linton

peewhyeff said:

Differing views , as I suspected. Seems like as members of the public  we all look at it differently. How are we supposed to understand how D.W.P work out the figures,  even they can't be  consistent. Confidence in the D.W.P. is zero.

Following more research (see https://www.accountingweb.co.uk/any-answers/backdated-state-pension) it would appear that post 2016 SP "backdating" is taxable in the year it should have been paid.  HMRC will sort this out after you claim SP and send you a tax bill.  Clearly this could be quite complicated if it moves you into a different tax band.

So backdating SP as opposed to deferring it would appear to provide no advantages whatsoever except perhaps delaying the inevitable tax payment.  If that isnt an issue you would be better off taking the SP when it was due and putting it into a savings account.

However my belief that you dont actually lose anything by backdating remains.

As opposed to problems for HMRC I cant see any real issue for DWP - they effectively put the money aside whilst you dont claim the pension and pay it out when you do.