Old State pension deferral under pre 2016 pension

firstdan

I deferred my state pension under the old system for more than 10 years. I am still at full employment. Time has come to think about how to take my deferred pension:
1.  Lump sump or as additional pension
2. I am clear what I get as an additional pension . 10.4 % increase for each year deferred. And is not cumulative. After 10 years by pension has gone up more than 100%. 

3.  LUMP SUM: for each year my pension  goes up with 2 % plus Bank of England base rate for each year deferred. Question I have is this? Is the interest cumulative? Is the interest added for the first year goes up with interest for the second year and so on? 

4 if I take my pension and deferred pension, can I defer it again?

xylophone

Had you read through this thread and links?

https://forums.moneysavingexpert.com/discussion/comment/81366317#Comment_81366317

GreenVitesse1968

I am at the moment in dispute with the DWP over my Extra State Pension payments, which they are being paid in line with the CPI index each year. All of the information I received in the years leading up to me deciding to defer my State Pension, that was in 2010, led me to believe that I would receive an increased amount, at a rate of 10.4% per year for each five week period of Deferral. In my case the Deferred period was 201 weeks, with me claiming my BSP. in February 2014  which entitled me to 40.2% of the Basic State Pension extra, on top of my weekly Basic State Pension. This was paid for the first year, but for each subsequent year the percentage amount paid extra has reduced, so that now after eleven years, I am receiving just 34.8% of the Basic State Pension, rather than the 40.2% promised. I have read various Deferred Pension Guidance booklets produced prior to 2010, and in none of them does it say that the the annual increase for ESP will be in line with the CPI. This is only stated in later information post 2016.

What the DWP is choosing to do, is to regard the ESP as an Increment, along with Graduated Retirement Benefits, Additional State Pension, Pre and Post 97 additional State Pension, and others. I maintain that this is wrong, because as the name suggests, ESP is Extra State Pension, which has been earned, as a result of sacrificing one's State Pension for a number of years. As such, it is part of one's State Pension, and should therefore be increased annually with the Triple Lock in the same way as the Basic State Pension is treated. If one had claimed the State Pension at one's normal retirement date, then the amount would be increased alongside the rest of one's Pension in line with the Triple Lock. I have produced a table which shows the percentage decrease each year since 2014, and I have calculated that the shortfall in payments, is £2,520 so far. This really is a disgrace, and in my opinion is verging on being fraudulent. In another ten years, what is the payment likely to be, at least 10% less than the 40.2% originally earned.

I believe that this 40.2% is a constant, and cannot be altered, this is after all what one has earned by deferring one's State Pension claim for 201 weeks, and there was no information within the guidance booklets to say that the rate of 10.4% per year would be reduced. In fact it states quite clearly, that by Deferring one's Pension claim, one will receive an "Increased Pension for life" This is totally misleading and I believe dishonest, since the DWP is deliberately reducing the amount of Pensioners Income without justification.      

GreenVitesse1968

Dear Martin,

I believe that this subject would be good material for your TV programme, for how many other hard working and deserving Pensioners, are being defrauded in this way?

luvchocolate

GreenVitesse1968 said:

Dear Martin,

I believe that this subject would be good material for your TV programme, for how many other hard working and deserving Pensioners, are being defrauded in this way?

Doubt Martin will read this he sold this site a while ago 

hugheskevi

Increase of increments obtained through deferral has been based on price increases for a very long time.

There was a year, just over 20 years ago, when increments increased by more the prices to be in alignment with the increase to Basic State Pension. That was in the early days of the Basic State Pension being increased by the higher of 0%, RPI, or ad hoc increases as decided by DWP/HMT. But after that they has escalated in line with prices. During the 1980s and 1990s both basic state pension and increments increased by RPI with a floor of 0% so there wasn't an issue.

This is a non-starter of a campaign and I think you are only wasting your time disputing an extremely long-standing policy with DWP.

Marcon

GreenVitesse1968 said:

Dear Martin,

I believe that this subject would be good material for your TV programme, for how many other hard working and deserving Pensioners, are being defrauded in this way?

Misunderstanding isn't fraud 

Linton

GreenVitesse1968 said:

I am at the moment in dispute with the DWP over my Extra State Pension payments, which they are being paid in line with the CPI index each year. All of the information I received in the years leading up to me deciding to defer my State Pension, that was in 2010, led me to believe that I would receive an increased amount, at a rate of 10.4% per year for each five week period of Deferral. In my case the Deferred period was 201 weeks, with me claiming my BSP. in February 2014  which entitled me to 40.2% of the Basic State Pension extra, on top of my weekly Basic State Pension. This was paid for the first year, but for each subsequent year the percentage amount paid extra has reduced, so that now after eleven years, I am receiving just 34.8% of the Basic State Pension, rather than the 40.2% promised. I have read various Deferred Pension Guidance booklets produced prior to 2010, and in none of them does it say that the the annual increase for ESP will be in line with the CPI. This is only stated in later information post 2016.

What the DWP is choosing to do, is to regard the ESP as an Increment, along with Graduated Retirement Benefits, Additional State Pension, Pre and Post 97 additional State Pension, and others. I maintain that this is wrong, because as the name suggests, ESP is Extra State Pension, which has been earned, as a result of sacrificing one's State Pension for a number of years. As such, it is part of one's State Pension, and should therefore be increased annually with the Triple Lock in the same way as the Basic State Pension is treated. If one had claimed the State Pension at one's normal retirement date, then the amount would be increased alongside the rest of one's Pension in line with the Triple Lock. I have produced a table which shows the percentage decrease each year since 2014, and I have calculated that the shortfall in payments, is £2,520 so far. This really is a disgrace, and in my opinion is verging on being fraudulent. In another ten years, what is the payment likely to be, at least 10% less than the 40.2% originally earned.

I believe that this 40.2% is a constant, and cannot be altered, this is after all what one has earned by deferring one's State Pension claim for 201 weeks, and there was no information within the guidance booklets to say that the rate of 10.4% per year would be reduced. In fact it states quite clearly, that by Deferring one's Pension claim, one will receive an "Increased Pension for life" This is totally misleading and I believe dishonest, since the DWP is deliberately reducing the amount of Pensioners Income without justification.      

For people reaching SP age prior to 2016 the triple lock only applies to the basic SP. It does not apply to Extra SP (from deferring), nor to Additional SP (from SERPS), both of which only increase by CPI.  There is no point in arguing with DWP about it. They are correctly implementing the law as enacted in 2010.

I don’t think you can reasonably claim to be badly treated since the deferment rate is now only just over half your 10.4% gain. The new SP did not change the triple lock rules.

xylophone

https://researchbriefings.files.parliament.uk/documents/SN05830/SN05830.pdf

III The CPI – uprating benefits and pensions

• The CPI covers a broader population than the RPI, which excludes high-income households and low-income pensioners.

In its June 2010 Budget the Coalition Government announced that the Retail Prices Index (RPI) would no longer be used to determine the increase in benefits and state pensions. Instead the Consumer Prices Index (CPI) would be used to uprate benefits, and state pensions, including public service pensions. Subsequently, the Government announced that the CPI would be used to provide the statutory minimum revaluation and indexation for occupational pensions.

This budget also introduced the triple lock which like the change above became operative from tax year 2011/12.

With regard to old state pension, the effect of this was that from that date (with exception, see below) Basic SP increased by highest of CPI/earnings/2.5%.

https://commonslibrary.parliament.uk/research-briefings/cbp-7812/#:~:text=The triple lock is a,age from 6 April 2016.

Additional SP increased by CPI.