State Pension

Hi guys need some advice for my mum … divorced (single) 
was meant to retire in 2007 , took retirement in October 2024 
deferred state 17 years has now to make a decision lump sum or extra payments each 
now the dilemma been diagnosed with state 4 cancer …. Unsure on life expectancy 
If took the extra weekly payments and passed away what would happen to the money she has built up over the last 17 years ? Go to her estate of back to government????? 
Any advice appreciated x
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  • Flugelhorn
    Flugelhorn Posts: 7,144 Forumite
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    I think the only way to be sure of getting "all the money" would be to take a lump sum offer. There is no "pot" to the state pension, if someone dies it effectively ends the pension payments - no money to the estate 
  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 17,103 Forumite
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    Hi guys need some advice for my mum … divorced (single) 
    was meant to retire in 2007 , took retirement in October 2024 
    deferred state 17 years has now to make a decision lump sum or extra payments each 
    now the dilemma been diagnosed with state 4 cancer …. Unsure on life expectancy 
    If took the extra weekly payments and passed away what would happen to the money she has built up over the last 17 years ? Go to her estate of back to government????? 
    Any advice appreciated x
    It is a straightforward choice, extra pension for as long as lives or a one off lump sum.

    If she opts for extra pension then that simply stops when she dies.  There is nothing to go to her estate or "back to government".

    There are very specific rules relating to taxing the deferral lump sum.  Does she (you) definitely understand those?
  • There’s a lot to back to the government all the pension plus interest that she hadn’t claimed since 2007 
  • I’ve contacted the DWP and they are stating that if she claims weekly payments what’s left in the pot will go to her estate ? 
    Obviously reduced by the extra weekly payments taken …. Why am I getting conflicting messages !????
  • molerat
    molerat Posts: 34,266 Forumite
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    Where life expectancy is in question then taking the lump sum is the only way to go.  And if she can keep her other income in the year she takes the lump sum below her personal allowance then there will be no tax on it.
  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 17,103 Forumite
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    I’ve contacted the DWP and they are stating that if she claims weekly payments what’s left in the pot will go to her estate ? 
    Obviously reduced by the extra weekly payments taken …. Why am I getting conflicting messages !????
    There is no "pot".

    Did you get a trainee?
  • Brie
    Brie Posts: 14,130 Ambassador
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    edited 22 January at 11:34PM
    Might be best to pop on here all the different things she's entitled to?

    I do know that she can back date her state pension if she hasn't been taking it- for how long????  But don't do it if she's been in receipt of any income related benefits -- same for anything else really.  As when you back date those benefits don't exist and she would have to pay back anything received.  
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  • My comiserations to your family.
    Take the lump sum. There is no pot.
    I hate to be gruesome here, but I will just stick to the numbers. The lump sum receives special tax treatment. If your mum is normally a 20% taxpayer, the entire lump sum will be taxed at 20%. If you can wait until April, is it possible she will be a 0% taxpayer next tax year? Leaving claiming until then could result in 0% tax on the lump sum.
  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 17,103 Forumite
    10,000 Posts Fifth Anniversary Name Dropper
    My comiserations to your family.
    Take the lump sum. There is no pot.
    I hate to be gruesome here, but I will just stick to the numbers. The lump sum receives special tax treatment. If your mum is normally a 20% taxpayer, the entire lump sum will be taxed at 20%. If you can wait until April, is it possible she will be a 0% taxpayer next tax year? Leaving claiming until then could result in 0% tax on the lump sum.
    That isn't quite how it works.

    Someone who is a 0% taxpayer would actually be liable to 20% on the lump sum.

    I think your taxable income needs to be no more than your Personal Allowance for the lump sum to escape tax.

    And something that people sometimes overlook is to count the State Pension itself (not the deferral lump sum) as taxable income once that starts.
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