Accrued state pension

wenkipper1

I am over pension age but still working full-time and have deferred my state pension - When I do decide to retire and claim it I believe that I can only take 12 months of the accrued amount as a lump sum but cannot find out how the balance will be paid - a colleague advises that it's spread over the next 20 years pension payments - surely not?

molerat

There is no "lump sum" with a post 2016 state retirement age deferment.  You can backdate the pension commencement by up to 12 months which will be paid in a lump sum but the remaining deferment is paid by increasing the weekly amount equivalent to 1% for each 9 weeks deferred up to the point of (backdated) commencement.  The backdated pension will be taxable in the year it was accrued, not paid.

Linton

wenkipper1 said:

I am over pension age but still working full-time and have deferred my state pension - When I do decide to retire and claim it I believe that I can only take 12 months of the accrued amount as a lump sum but cannot find out how the balance will be paid - a colleague advises that it's spread over the next 20 years pension payments - surely not?

With the post 2016 state pension there are 2 options if you dont claim it immediately you reach State Pension Age:

1) You can delay claiming it for up to 12 months and then ask for for a lumpsum payout backdated to when you reached Stae Pension Age.  There is no benefit to you .  You will be taxed on the assumption that you received the pension when it was due, not when the lump sum is received.

2) You can defer starting you SP.  When you ask for it to be started you will gain 1% extra  for each 9 weeks deferred.  There is no lump sum option. 

In the unlikely event you are talking about pre 2016 SP the benefits from deferral are much higher.

Marcon

wenkipper1 said:

I am over pension age but still working full-time and have deferred my state pension - When I do decide to retire and claim it I believe that I can only take 12 months of the accrued amount as a lump sum but cannot find out how the balance will be paid - a colleague advises that it's spread over the next 20 years pension payments - surely not?

Correct: not. Which sadly shows how little colleagues know what they're talking about, and how little ability they have to do some simple googling:

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

Dazed_and_C0nfused

wenkipper1 said:

I am over pension age but still working full-time and have deferred my state pension - When I do decide to retire and claim it I believe that I can only take 12 months of the accrued amount as a lump sum but cannot find out how the balance will be paid - a colleague advises that it's spread over the next 20 years pension payments - surely not?

No, it's not.  Surprised your colleagues already knows when you will die 😳.

There isn't a "lump sum" option for anyone who reaches State Pension age after 5 April 2016.

When you eventually decide to claim it you can backdate your claim by a maximum of 12 months and that will be paid in one go by DWP.

Whatever your increased State Pension is as a result of deferring will be paid for the rest of your life.  That might be 20 days, 20 weeks, 20 years or in rare cases 40 years.

t0rt0ise

I think what your colleague is referring to is how long it takes to get back all the money you have given up by not claiming your pension when you first could have done. So you give up a year's pension say, and get 5.8% back each year.  Isn't that so? If so it takes a good long time to get back what you gave up.