Deferred State Pension

pinnks

1957DfurdPensionist said:

@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

In which case you have all you need already, so why repeat it on the claim invite - waste of ink and paper.  And as a mathematical thoroughbred I would expect you already to have been dissecting your forecast and NI records.

molerat

Until you apply for the pension it is still an estimate and is as shown on the forecast.  Once the application is in the button is pressed and the computer starts churning and spits out the numbers which are then sent to you.  Once beyond state retirement date the forecast is no longer valid, once the application is received the wheels start churning to bring all that data together. All the data is available on request but would be of little interest or value to the average person.

1957DfurdPensionist

Sarahspangles said:

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.

Yes well done.  But do make sure you have downloaded it all for future use should you accidentally or deliberately reach SPa wihout claiming your pension, because the only thing you will see online after SPa is your NI contribution record.  No forecast.  Nada!

1957DfurdPensionist

pinnks said:

1957DfurdPensionist said:

@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

In which case you have all you need already, so why repeat it on the claim invite - waste of ink and paper.  And as a mathematical thoroughbred I would expect you already to have been dissecting your forecast and NI records.

Ha! Well I certainly tried, mostly back in the years when the Triple Lock had not really made a massive difference as it has done in the last two years.  Back then I had convinced myself that the UK new State Pension was not going to amount to much-  That was especially when I compared my online forecast with my aged father being paid well over £200 per week from his old style SP 10 years ago.  Even when I reviewed finances for my aged mother who survived my father, but who had never paid full NI contributions, she too inherited a chunk of my father's and her SP was also bumped to over £200 per week.  At the time, my forecast was little more than 60% of that despite having 36 years contributions.  So I decided I should concentrate on my private pensions instead.

As it happens this week, in the last 48 hours, I received an unexpected transfer quote for a Section 32 BuyOut policy which turns out to have increased an average of exactly 10%pa for the last 10 years!  I was amazed.  In the early days (noughties) it had bumbled along at around 4%pa maximum.

And, lo and behold, in the last couple of hours, I have become the very happy possessor of a written indication of what my nSP will be both with and without a retrospective lump sum!  So I can pretty much report that my mix of Class2 and Class3 VC's and an exact 9 week multiple of deferral, has set me up quite surprisingly, such that I do not anticipate having to touch my private pensions for a while - unless I take up some expensive hobby or get led astray (now isn't that a wonderful thought !

dealyboy

1957DfurdPensionist said:

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.

1/9% per week
weeks of deferment ... percentage of nSP at date of claim
< 9 weeks ... 0%
9 weeks ... 1%
9 weeks 1 to 6 days ... 1%
10 weeks ... 1 1/9%
52 weeks ... 5 7/9% (5.78% 2dp rounded)

https://www.gov.uk/new-state-pension/increase-retirement-income

lump sum payment
This is when a claim is backdated for up to 12 months when the claim is within 12 months of state pension eligibility after which it is deferred. The lump sum is assessed for income tax in the year(s) state pension payments would have been made. There is no credit interest.

https://www.ageuk.org.uk/siteassets/documents/factsheets/fs19_state_pension_fcs.pdf (6.1)

https://forums.moneysavingexpert.com/discussion/6523015/accrued-state-pension

Dazed_and_C0nfused

dealyboy said:

1957DfurdPensionist said:

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.

1/9% per week
weeks of deferment ... percentage of nSP at date of claim
< 9 weeks ... 0%
9 weeks ... 1%
9 weeks 1 to 6 days ... 1%
10 weeks ... 1 1/9%
52 weeks ... 5 7/9% (5.78% 2dp rounded)

https://www.gov.uk/new-state-pension/increase-retirement-income

lump sum payment
This is when a claim is backdated for up to 12 months when the claim is within 12 months of state pension eligibility after which it is deferred. The lump sum is assessed for income tax in the year(s) state pension payments would have been made. There is no credit interest.

https://www.ageuk.org.uk/siteassets/documents/factsheets/fs19_state_pension_fcs.pdf (6.1)

https://forums.moneysavingexpert.com/discussion/6523015/accrued-state-pension

I think that bit can confuse people as they get a lump sum in say May 2025, after backdating a claim for 12 months, but will, depending on their other income in the previous tax year, get a large tax bill because the majority of the lump sum relates to the previous tax year.

1957DfurdPensionist

dealyboy said:
1/9% per week

weeks of deferment ... percentage of nSP at date of claim
< 9 weeks ... 0%
9 weeks ... 1%
9 weeks 1 to 6 days ... 1%
10 weeks ... 1 1/9%
52 weeks ... 5 7/9% (5.78% 2dp rounded)

https://www.gov.uk/new-state-pension/increase-retirement-income

lump sum payment
This is when a claim is backdated for up to 12 months when the claim is within 12 months of state pension eligibility after which it is deferred. The lump sum is assessed for income tax in the year(s) state pension payments would have been made. There is no credit interest.

https://www.ageuk.org.uk/siteassets/documents/factsheets/fs19_state_pension_fcs.pdf (6.1)

https://forums.moneysavingexpert.com/discussion/6523015/accrued-state-pension

@dealyboy - that's a great plain English explanation of the 1/9% per week so readers can forget pretty much more or less everything I wondered about when questioning how it worked    That is more or less everything except whether there could be two parts of a deferral either side of a backdated lump sum ... do feel free to read on!

So, I am still not sure that everyone is on the same page with regard to eligibility and parameters of lump sum backdating (DWP peeps included - despite the one I've been in touch with most recently - and just like a notable group of DWP colleagues, being absolutely great to deal with.  All super efficient agents each in their own ways, but their ways not quite identical!

Slighty bafflingly, this week culminated with me being offered a lump sum for a period longer than 12 months as part of my nSP claim which so far has been deferred almost 18 months.  Before the oversize lump sum was offered (it includes about 3½ months backlog since telephone claim date), I had been under the impression that the latest period - the backlog - would instead be added to the front end i.e. the deferral period from SPa to beginning of backdated period.  The backdated period was not expected to be greater than 12 months and could be less at my option I thought.  Thus the backlog would then come into play and count as a second part towards the separate deferral calculation.

I'd been told previously that the backdated payment if I chose it, would be for a period of "up to 12 months" but ending on my telephone claim date.  I have also been told more than once along the way in this saga, and inconsistently with all the above, that I did not have the option of any backdated sum - it'd all be deferral calculated extra pension, like it or lump it basically.  Making it all deferral calculated extra pension has been confirmed as just an option as of this week in my case!

Is this a one off?  Anyone else slightly baffled ?

Dazed_and_C0nfused

1957DfurdPensionist said:

dealyboy said:
1/9% per week

weeks of deferment ... percentage of nSP at date of claim
< 9 weeks ... 0%
9 weeks ... 1%
9 weeks 1 to 6 days ... 1%
10 weeks ... 1 1/9%
52 weeks ... 5 7/9% (5.78% 2dp rounded)

https://www.gov.uk/new-state-pension/increase-retirement-income

lump sum payment
This is when a claim is backdated for up to 12 months when the claim is within 12 months of state pension eligibility after which it is deferred. The lump sum is assessed for income tax in the year(s) state pension payments would have been made. There is no credit interest.

https://www.ageuk.org.uk/siteassets/documents/factsheets/fs19_state_pension_fcs.pdf (6.1)

https://forums.moneysavingexpert.com/discussion/6523015/accrued-state-pension

@dealyboy - that's a great plain English explanation of the 1/9% per week so readers can forget pretty much more or less everything I wondered about when questioning how it worked    That is more or less everything except whether there could be two parts of a deferral either side of a backdated lump sum ... do feel free to read on!

So, I am still not sure that everyone is on the same page with regard to eligibility and parameters of lump sum backdating (DWP peeps included - despite the one I've been in touch with most recently - and just like a notable group of DWP colleagues, being absolutely great to deal with.  All super efficient agents each in their own ways, but their ways not quite identical!

Slighty bafflingly, this week culminated with me being offered a lump sum for a period longer than 12 months as part of my nSP claim which so far has been deferred almost 18 months.  Before the oversize lump sum was offered (it includes about 3½ months backlog since telephone claim date), I had been under the impression that the latest period - the backlog - would instead be added to the front end i.e. the deferral period from SPa to beginning of backdated period.  The backdated period was not expected to be greater than 12 months and could be less at my option I thought.  Thus the backlog would then come into play and count as a second part towards the separate deferral calculation.

I'd been told previously that the backdated payment if I chose it, would be for a period of "up to 12 months" but ending on my telephone claim date.  I have also been told more than once along the way in this saga, and inconsistently with all the above, that I did not have the option of any backdated sum - it'd all be deferral calculated extra pension, like it or lump it basically.  Making it all deferral calculated extra pension has been confirmed as just an option as of this week in my case!

Is this a one off?  Anyone else slightly baffled ?

People get confused with the old basic State Pension referral rules.  They allowed a deferral lump sum instead of an increased weekly rate.  And that lump sum had special (incredibly generous) tax rules.

That option is not available for anyone reaching State Pension after 5 April 2016 so quite correctly some people will say there is no possibility of a lump sum under the new deferral system.

But the new deferral system allows for a backdated claim.  So anyone making a backdated claim can get a "lump sum" paid into their bank account.  But it's not a lump sum in the way deferal lump sums were thought of for many years.

dealyboy

@Dazed_and_C0nfusedsaid:

1957DfurdPensionist said:

dealyboy said:
1/9% per week

weeks of deferment ... percentage of nSP at date of claim
< 9 weeks ... 0%
9 weeks ... 1%
9 weeks 1 to 6 days ... 1%
10 weeks ... 1 1/9%
52 weeks ... 5 7/9% (5.78% 2dp rounded)

https://www.gov.uk/new-state-pension/increase-retirement-income

lump sum payment
This is when a claim is backdated for up to 12 months when the claim is within 12 months of state pension eligibility after which it is deferred. The lump sum is assessed for income tax in the year(s) state pension payments would have been made. There is no credit interest.

https://www.ageuk.org.uk/siteassets/documents/factsheets/fs19_state_pension_fcs.pdf (6.1)

https://forums.moneysavingexpert.com/discussion/6523015/accrued-state-pension

@dealyboy - that's a great plain English explanation of the 1/9% per week so readers can forget pretty much more or less everything I wondered about when questioning how it worked    That is more or less everything except whether there could be two parts of a deferral either side of a backdated lump sum ... do feel free to read on!

So, I am still not sure that everyone is on the same page with regard to eligibility and parameters of lump sum backdating (DWP peeps included - despite the one I've been in touch with most recently - and just like a notable group of DWP colleagues, being absolutely great to deal with.  All super efficient agents each in their own ways, but their ways not quite identical!

Slighty bafflingly, this week culminated with me being offered a lump sum for a period longer than 12 months as part of my nSP claim which so far has been deferred almost 18 months.  Before the oversize lump sum was offered (it includes about 3½ months backlog since telephone claim date), I had been under the impression that the latest period - the backlog - would instead be added to the front end i.e. the deferral period from SPa to beginning of backdated period.  The backdated period was not expected to be greater than 12 months and could be less at my option I thought.  Thus the backlog would then come into play and count as a second part towards the separate deferral calculation.

I'd been told previously that the backdated payment if I chose it, would be for a period of "up to 12 months" but ending on my telephone claim date.  I have also been told more than once along the way in this saga, and inconsistently with all the above, that I did not have the option of any backdated sum - it'd all be deferral calculated extra pension, like it or lump it basically.  Making it all deferral calculated extra pension has been confirmed as just an option as of this week in my case!

Is this a one off?  Anyone else slightly baffled ?

People get confused with the old basic State Pension referral rules.  They allowed a deferral lump sum instead of an increased weekly rate.  And that lump sum had special (incredibly generous) tax rules.

That option is not available for anyone reaching State Pension after 5 April 2016 so quite correctly some people will say there is no possibility of a lump sum under the new deferral system.

But the new deferral system allows for a backdated claim.  So anyone making a backdated claim can get a "lump sum" paid into their bank account.  But it's not a lump sum in the way deferal lump sums were thought of for many years.

lump sum payment
Edit: @1957Dfurdpensionist I now believe the limitation to backdating a claim to a state pension in deferral (suspension) it needing to be within 12 months of the SP eligibility date is incorrect ... see subsequent comments  .

... so in order for backdating to be available a claim has to be within the 12 months following the date of achieving state pension age, and the maximum time the pension can be backdated is 12 months. If the claim is over 12 months from the eligibility date then it is a deferred claim with an additional 'extra state pension' payable alongside the assessed new state pension.

If the claim is backdated to a date after the state pension eligibility date then there will be a lump sum for the period from the chosen date to the claim date and a deferred pension for the period from the eligibility date to the chosen start date (as long as it is at least 9 weeks).

If it is now 18 months from the eligibility date then you are outside the scope of backdating the start date. If you were to claim you would have an extra state pension of approximately 78 weeks x 1/9% of your nSP assessment.

If you claimed 6 months ago a backdated start date would have been available to you with a lump sum payable. If there was a backlog in claims of 3 1/2 months at the time then your first payment would have included a lump sum for that period. Assuming you had backdated for 12 months then your first payment would have been ... backdated 1 year nSP  + 3 1/2 months nSP, paid 2 1/2 months ago, following which you would have received nSP at your assessed rate every payment period (defaults to 4 weeks in arrears).

Of course all this depends on the DWP (and me) understanding and applying the rules  .

Dazed_and_C0nfused

lump sum payment
... so in order for backdating to be available a claim has to be within the 12 months following the date of achieving state pension age

@dealyboy

Do you have a source for that?

I'm not disputing that a backdating payment is limited to a maximum of 12 months but I'm struggling to find anything that says you couldn't  defer for say 5 years and then when you decide to claim you can have the first 4 years treated as deferred (extra weekly pension) and the last 12 months as a backdated (lump sum) payment.