Deferred State Pension

1957DfurdPensionist

@pinnks, well horses for courses I guess - if you paint all the runners for SPa as just sheeple waiting to be fed their meagre rations, then maybe.  Some of us are thoroughbred mathematical machines and we need good data to aid our planning

1957DfurdPensionist

PS After you actually reach SPa you can no longer get access to any new online pension forecast and you'd better have dowloaded one or two in the years preceding if you get the letter and then start wondering!

dealyboy

If you defer you get 1/9% for each week deferred added to your SP when you claim and start to receive it, as long as you have deferred for at least 9 weeks. This 'extra state pension' increases by the previous year's September CPI each April and is shown separately on the yearly assessment sent out February/March. There is no lump sum payment.

Since the freezing of the thresholds it is increasing likely to be taxed as income at one's marginal rate.

1957DfurdPensionist

As an experiment, and prompted by @molerat 's reminder that attached Deferral enhancements only increase with CPI, I have calculated the cumulative increase that applied from April 2017 to April 2023 as +23.6%.  That compares to +30.95% cumulative Triple-Lock increase over the same period.  Interestingly, if I have looked in the right places, it seems there was an anomaly in 2023 where the CPI increase used for protected payments and deferral enhancements was the same as the number used for the Triple Lock (+10.1%), but in April 2024 the CPI effect was +6.5% cf +8.5% Triple Lock I believe.  And in April 2025, it looks like the CPI number they'll use is around 2.6% versus Triple Lock 4.1% (again, if I have looked in the right places).

QrizB

1957DfurdPensionist said:

Interestingly, if I have looked in the right places, it seems there was an anomaly in 2023 where the CPI increase used for protected payments and deferral enhancements was the same as the number used for the Triple Lock (+10.1%), but in April 2024 the CPI effect was +6.5% cf +8.5% Triple Lock I believe.  And in April 2025, it looks like the CPI number they'll use is around 2.6% versus Triple Lock 4.1% (again, if I have looked in the right places).

It's not an anomaly. The Triple Lock is the larger of CPI, earnings growth or 2.5% (which is why it's the triple lock). If CPI is the largest, the Triple Lock will equal CPI.

1957DfurdPensionist

QrizB, of course you are right, I misled myself for some reason that one parameter in the Triple Lock was RPI not CPI.  So flippin' confusing that we still have both even though RPI was prematurely denounced officially years ago.  Amazingly I still have an untouched DB pension that has increases linked to RPI and recently Aviva offered an annuity quote for some separate DC funds I also have untouched, linked to annual RPI increases.  That was just earlier this week so it had muddled my thinking!

1957DfurdPensionist

dealyboy said:

If you defer you get 1/9% for each week deferred added to your SP when you claim and start to receive it, as long as you have deferred for at least 9 weeks. This 'extra state pension' increases by the previous year's September CPI each April and is shown separately on the yearly assessment sent out February/March. There is no lump sum payment.

Since the freezing of the thresholds it is increasing likely to be taxed as income at one's marginal rate.

Hi @dealyboy, In a parallel thread I have questioned the 1/9% for each week as to whether it is a rate of increase (which would give +1.004% if applied every week for 9 weeks) or just an element of a simple sum designed purely to add up to 1% in 9 weeks, and if it (+1/9% is applied weekly for 52 weeks it gives +5.94%!).

You say there is no lump sum payment.  But a lump sum retro-payment of up to 12 months is surely an option depending how long you defer and how much of it you want as the retro-paid lump sum I believe).  I do also believe that there are some DWP pension claim telephone agents who do not understand the option one way or another.

Flugelhorn

1957DfurdPensionist said:

Could those of you who have in fact seen invitation letters please confirm whether or not they contain personalised forecast figures for a normal SPa start date?  I can hardly believe they would not ... surely by now (so far beyond the introduction of nSP, the abolition of contracting out, and the necessary double-checking (between HMRC and surviving private pension schemes) of contracted out GMP's and thus individual COPE numbers, such things must be entirely computerised and dare we say, accurate?  Might such letters also reconfirm the full NI years/remaining gap years, and even remind us punters of our individual COPE figures and effect? Or do they perhaps not invite any appeal, just "Here's the weekly amount - do you want to start it now ?".

no, there was no amount - just "do you want to claim it?" 

1957DfurdPensionist

Flugelhorn said:

no, there was no amount - just "do you want to claim it?" 

Seriously?? "it" being what your crystal ball may or may not have told you??
I am flabbergasted.  Every nSP is different due to so many individual variables e.g. every contracted out record is unique and every NI contribution record too, and yet DWP just says you qualify for nSP shortly at age 66 - do you want to claim it?  And then presumably if you say yes, when payment starts what, about 4 months later, the exact amount you receive is simply to be assumed correct with no explanation?

Sarahspangles

1957DfurdPensionist said:

Flugelhorn said:

no, there was no amount - just "do you want to claim it?" 

Seriously?? "it" being what your crystal ball may or may not have told you??
I am flabbergasted.  Every nSP is different due to so many individual variables e.g. every contracted out record is unique and every NI contribution record too, and yet DWP just says you qualify for nSP shortly at age 66 - do you want to claim it?  And then presumably if you say yes, when payment starts what, about 4 months later, the exact amount you receive is simply to be assumed correct with no explanation?

I’ve had access to my HMRC account and hence my NI record and forecast State Pension for several years. So I’ve plenty of time to check it.