DEFERRING STATE PENSION

PurpleMini

Hi, I like others have found the Gov website on this unclear.  And I am eligible to claim a state pension from early May 2025.
I do not work (carer) but have amarginal tax rate of 40% as I receive rental income from my property while I live with my father looking after him and his home etc. . 
I do not need the pension at the moment and it does not seem logical therefore to take the pension and pay 40% on it (as I do not work I do not believe I can get any tax advantage from paying into a SIPP above £2800 gov limit for the unemployed).
I would like to know:
i) if I delay for 12 months - can I receive as a lump sum of the max pension + 5.8% interest?
ii) if I delay for longer can I receive lump sums for each year deferred + 5.8% accumulated interest?
I read another thread on the topic of receiving an increase in the weekly pension of approx £12 (I haven't checked the exact amount as I write this) instead of a lump sum.  It said that deferring for just 1 year on this basis would take 17 years for pay back.  I do not know how it would work if deferring for longer on this basis (of increase in the weekly pension).
 Please can someone clarify in clearer english than the Government manages. I would be so grateful to be able to make the right decision from clear and correct understanding of the facts.
Many thanks,
 

HappyHarry

For deferrals starting after April 2016 there is no lump sum option available, only an enhanced regular pension option.

molerat

But you can backdate the commencement of the pension by up to 12 months and receive that amount as a lump sum and go forward with the normal, or enhanced if the pension was deferred by more than 12 months, payments.

Marcon

This might make easier reading than the Gov website:

https://www.moneyhelper.org.uk/en/pensions-and-retirement/state-pension/putting-off-your-state-pension

or https://www.litrg.org.uk/pensions/state-pension/tax-state-pension/putting-deferring-claiming-state-pension

poseidon1

PurpleMini said:

Hi, I like others have found the Gov website on this unclear.  And I am eligible to claim a state pension from early May 2025.
I do not work (carer) but have amarginal tax rate of 40% as I receive rental income from my property while I live with my father looking after him and his home etc. . 
I do not need the pension at the moment and it does not seem logical therefore to take the pension and pay 40% on it (as I do not work I do not believe I can get any tax advantage from paying into a SIPP above £2800 gov limit for the unemployed).
I would like to know:
i) if I delay for 12 months - can I receive as a lump sum of the max pension + 5.8% interest?
ii) if I delay for longer can I receive lump sums for each year deferred + 5.8% accumulated interest?
I read another thread on the topic of receiving an increase in the weekly pension of approx £12 (I haven't checked the exact amount as I write this) instead of a lump sum.  It said that deferring for just 1 year on this basis would take 17 years for pay back.  I do not know how it would work if deferring for longer on this basis (of increase in the weekly pension).
 Please can someone clarify in clearer english than the Government manages. I would be so grateful to be able to make the right decision from clear and correct understanding of the facts.
Many thanks,
 

MSE seem to set out the pros and cons in reasonably clear language below - 

https://www.moneysavingexpert.com/savings/should-i-defer-my-state-pension/#:~:text=You don't have to,what you need to consider

Since a lump will not be forthcoming, how do you value a future ( indexed) annual £667 extra pension but taxed at 40% for a period you cannot ascertain,  compared to the impending benefit of £11,500 albeit  eventually taxed at 40% under self assessment? 

 For you,  the point at which your annual tax exposure falls to 20% rather than 40% at present will dictate how valuable an extra indexed  £667 annual income will be to you.

Since you self assess, you would get the £11,500 intially on a gross untaxed basis, so if you are a saver/ investor and do not spend the pension, is it likely you can  invest it  say in a SIPP/ISA combination to get an equivalent tax free £667 annual return?
I would have thought unlikely, unless you are prepared to take on a degree of investment risk.