Converting state pension to a monthly income stream

Sky_Dragon

I'm retired and coming up to state pension age, and found it frustrating that state pensions are still paid based on weekly cycles which means the state pension income won't tie up for cycles in settling cedit card bills and paying for utilities.

It appears that some people have tried to set up futile petitions to get the government to provide a monthly payment option but this doesn't look to be on the horizon (I suspect the DWP computer system will need a major, expensive rewrite to hanfdle that!)

So, I've decided to try and simulate monthly payments myself via the following approach, and would welcome any comments in case I've missed something.

1. Set up a high(ish) interest current account to receive state pension payments (Possibly Kroo 4.1% AER);

2. Request my state pension is paid weekly and not 4 weekly. I belive this is an option that is not advertised widely but that can be requested. This means my pension (which is paid in arrears) spends more time sitting in my own account earning interest.

3. Set up a Monthly Standing order from the Kroo account for the equivalent of the monthly state pension into my regular "working" current account (i.e. the one most bills are paid from).

With the weekly payment smoothing the pension cash flow, and if I seed the Kroo account with a week's pension equivalent float at the beginning to avoid any overdrafts, I think this will give me a steady monthly income without having to regulary manage it and I just have to tweak the Kroo SO once a year to account for state pension changes.

I did also consider going to the post office weekly, queueing up to collect my pension in cash and putting it in a big jar at home but I don't think that would annoy enough people to get the govenerment to drag things into the late 20th century, let alone the 21st.

MallyGirl

Sounds like a decent plan

Dazed_and_C0nfused

Sky_Dragon said:

I'm retired and coming up to state pension age, and found it frustrating that state pensions are still paid based on weekly cycles which means the state pension income won't tie up for cycles in settling cedit card bills and paying for utilities.

It appears that some people have tried to set up futile petitions to get the government to provide a monthly payment option but this doesn't look to be on the horizon (I suspect the DWP computer system will need a major, expensive rewrite to hanfdle that!)

So, I've decided to try and simulate monthly payments myself via the following approach, and would welcome any comments in case I've missed something.

1. Set up a high(ish) interest current account to receive state pension payments (Possibly Kroo 4.1% AER);

2. Request my state pension is paid weekly and not 4 weekly. I belive this is an option that is not advertised widely but that can be requested. This means my pension (which is paid in arrears) spends more time sitting in my own account earning interest.

3. Set up a Monthly Standing order from the Kroo account for the equivalent of the monthly state pension into my regular "working" current account (i.e. the one most bills are paid from).

With the weekly payment smoothing the pension cash flow, and if I seed the Kroo account with a week's pension equivalent float at the beginning to avoid any overdrafts, I think this will give me a steady monthly income without having to regulary manage it and I just have to tweak the Kroo SO once a year to account for state pension changes.

I did also consider going to the post office weekly, queueing up to collect my pension in cash and putting it in a big jar at home but I don't think that would annoy enough people to get the govenerment to drag things into the late 20th century, let alone the 21st.

Or treat each 4 weekly payment as your months (State Pension) money and once a year have a splurge?

p00hsticks

Sky_Dragon said:

It appears that some people have tried to set up futile petitions to get the government to provide a monthly payment option but this doesn't look to be on the horizon (I suspect the DWP computer system will need a major, expensive rewrite to hanfdle that!)

It would - and as you point out, given the ease in which people can set up multiple bank accounts these days and so put into effect the simple workround you outline to simulate a monthly payment if they want it, I suspect the majority could suggest any number of items more worthy of the billions it would cost (universal Credit ended up costing over £12 billion to implement).

Hoenir

Sky_Dragon said:

It appears that some people have tried to set up futile petitions to get the government to provide a monthly payment option but this doesn't look to be on the horizon (I suspect the DWP computer system will need a major, expensive rewrite to hanfdle that!)

The economic cost and potential utilisation of valuable resources far outweigh the potential benefits. For those impacted techonolgy is available that can make the task pretty seamless. Lack of productivity is a curse on modern society. 

Bostonerimus1

Is this really a problem?

maman

I think you're being sensible to plan ahead. If your scheme works for you then that's fine. 

A simple way would be to build up a cushion in your account , while you're still working, which just gets added to weekly or monthly by the state pension.

Personally, I wouldn't feel comfortable living from one pension payment to the next but I do realise it's easier for some than others. 

barnstar2077

Bostonerimus1 said:

Is this really a problem?

I have, for last thirty years of my life, been paid on the 26th of every month.  When the time comes I will probably use a hybrid approach.
    Have an account which drops a lump sum into my direct debit account monthly, and also feeds my current account with a weekly spending allowance.  It will only be a minor inconvenience to set up, but an inconvenience none the less. 

Our often app based financial and bill paying culture has given us the expectation of options, but the truth is of course that those apps are only updated and tweaked regularly because they generate money for their respective companies. 

Linton

It seems foolish to run your current account so tightly that you cannot cope with a few days variation in debit and credit dates.  Just build up a buffer of 1 month’s SP.

Flugelhorn

the problem with monthly is spreading all the payments throughout the month my work pension if paid on a specific day of the month but obviously that has to be altered for weekends and bank holidays - the state pension is a specific day of the 4 weekly cycle and all pensioners are spread across that partly according to their NI number.

agree best to have a buffer of one month in the current account and then enjoy the 13th payment as a bonus

Moonwolf

Bostonerimus1 said:

Is this really a problem?

I doubt it is a problem for many people on this forum. 

However I know people who are living on very little and can be tripped up by an energy bill or rent going out the day before their money goes in. This is much more likely if you are paid 4 weekly but your big bills all go out monthly. While an energy bill doesn't have late payment penalties it could be enough to stop another payment or trip an overdraft.