Delaying UK Pension

[Neeranam]

I just got a voluntary class 2 payment from the government(343 pounds) and see that if I pay this for the last 2 years, I'll only have 5 years more to pay to get the full amount. 

Also just noticed that I can delay my pension.

Does anyone here do this and or what are the benefits?

 

[Polar Bear]

It works out to an increase of about 5.8% for each year you defer. 

https://www.gov.uk/deferring-state-pension/what-you-get 

[OJAS]

13 hours ago, Neeranam said:

Also just noticed that I can delay my pension.

Does anyone here do this and or what are the benefits?

 

As alluded to by @Polar Bear, a particular advantage to those of us living in LOS of doing this is that your State Pension could then be frozen at a higher rate than would otherwise have been the case had you claimed when you first became eligible. For instance, even though I became eligible in August 2014 I delayed claiming until April 2015 so as to get at least 1 triple lock increase under my belt!

 

[samtam]

14 minutes ago, OJAS said:

 

As alluded to by @Polar Bear, a particular advantage to those of us living in LOS of doing this is that your State Pension could then be frozen at a higher rate than would otherwise have been the case had you claimed when you first became eligible. For instance, even though I became eligible in August 2014 I delayed claiming until April 2015 so as to get at least 1 triple lock increase under my belt!

 

Not so, if you live in Thailand, and you claim you are not resident of UK. As far as I can see, it remains locked at the date you became eligible:

Quote

 

Annual increases

After you claim your State Pension, the extra amount you get because you deferred will usually increase each year based on the Consumer Price Index. It will not increase for some people who live abroad.

 

 

 

Quote

 

f you move abroad

If you move to any of the countries in this list, the rules for deferring are the same as in the UK:

• European Economic Area (EEA) countries
• Switzerland
• a country that the UK has a social security agreement with (except Canada or New Zealand)

If you move to a country that is not in the list, the extra payment you get will stay the same. It will not go up or down over time.

 

 

Edited April 19 by samtam

[Neeranam]

30 minutes ago, samtam said:

Not so, if you live in Thailand. It remains locked at the date you became eligible:

 

 

 

That sucks as that was a reason I was thinking of delaying. 

[OJAS]

1 hour ago, samtam said:

Not so, if you live in Thailand, and you claim you are not resident of UK. As far as I can see, it remains locked at the date you became eligible:

 

Well, that definitely wasn't so in my case! Having double-checked the correspondence I had with DWP at the time of my claim, I can confirm that I am, indeed, being paid on the basis of the April 2015 Basic Pension weekly rate of £115.95.

 

That said, though, maybe things have, indeed, now changed as a result of all the various changes which have taken place on the State Pension front over the past 9 years??

 

The following link might contain useful info for the OP:

 

https://www.gov.uk/deferring-state-pension

 

EDIT: I see that @Polar Bear has already provided this link!

 

Edited April 19 by OJAS

[samtam]

54 minutes ago, OJAS said:

 

Well, that definitely wasn't so in my case! Having double-checked the correspondence I had with DWP at the time of my claim, I can confirm that I am, indeed, being paid on the basis of the April 2015 Basic Pension weekly rate of £115.95.

 

That said, though, maybe things have, indeed, now changed as a result of all the various changes which have taken place on the State Pension front over the past 9 years??

 

The following link might contain useful info for the OP:

 

https://www.gov.uk/deferring-state-pension

 

EDIT: I see that @Polar Bear has already provided this link!

 

 

My quotes were from that link.

 

Certainly when I inquired about it, when my eligibility for UK State Pension started in March 2023, I was informed that even if I deferred, it would revert to the amount per week at the date of eligibility. So yes, maybe things changed since you deferred, as supported in the text of the links I copied.

[OJAS]

1 hour ago, samtam said:

 

My quotes were from that link.

 

Certainly when I inquired about it, when my eligibility for UK State Pension started in March 2023, I was informed that even if I deferred, it would revert to the amount per week at the date of eligibility. So yes, maybe things changed since you deferred, as supported in the text of the links I copied.

 

May have something to do with the introduction of the new State Pension for men born after 6 April 1951 and women after 6 April 1953, perhaps?

 

https://www.gov.uk/new-state-pension

 

In any event it definitely looks like a matter of further insult being added to injury since April 2015 when it comes to the frozen pension issue in our case!

 

Edited April 19 by OJAS

[Chomper Higgot]

I think it’s only worth deferring your state pension if you are still working past pension age and particularly if you pay higher rate income tax, or would do if your pension is included.

 

Of course personal circumstances vary.

 

 

[noobexpat]

2 hours ago, Chomper Higgot said:

I think it’s only worth deferring your state pension if you are still working past pension age and particularly if you pay higher rate income tax, or would do if your pension is included.

 

Of course personal circumstances vary.

 

 

 

Nonsense as usual. 

 

[steve187]

10 hours ago, samtam said:

Not so, if you live in Thailand, and you claim you are not resident of UK. As far as I can see, it remains locked at the date you became eligible:

 

 

 

i think that reads as, ''once you actually claim it does not increase annually'' why would you defer if there is no monetary gain- ie if you defer you lose a possible £11,000 ish 

[noobexpat]

On 4/18/2024 at 8:20 PM, Neeranam said:

 

Does anyone here do this and or what are the benefits?

 

 

I can actually calculate the consequences. But for you ....not a chance. 

[steve187]

8 hours ago, samtam said:

 

My quotes were from that link.

 

Certainly when I inquired about it, when my eligibility for UK State Pension started in March 2023, I was informed that even if I deferred, it would revert to the amount per week at the date of eligibility. So yes, maybe things changed since you deferred, as supported in the text of the links I copied.

so no increase in weekly amount but a loss of £11,000 ish

Edited April 19 by steve187

[Chomper Higgot]

2 minutes ago, noobexpat said:

 

Nonsense as usual. 

 

Apply your actuary skills and explain why.

 

Give it your best go.

[noobexpat]

10 minutes ago, Chomper Higgot said:

Apply your actuary skills and explain why.

 

Give it your best go.

 

WIFM?

 

 

[Chomper Higgot]

1 minute ago, noobexpat said:

 

WIFM?

 

 

You might recover some credibility.

 

You state my post was nonsense and you respond to another member telling him “I can actually calculate the consequences”.

 

So quit with your impression of a pigeon playing chess and deliver on these claimed actuary skills of yours.

 

 

[Mutt Daeng]

20 hours ago, samtam said:

 

My quotes were from that link.

 

Certainly when I inquired about it, when my eligibility for UK State Pension started in March 2023, I was informed that even if I deferred, it would revert to the amount per week at the date of eligibility. So yes, maybe things changed since you deferred, as supported in the text of the links I copied.

I agree. A couple of years ago, a friend of mine deferred his pension for a year, thinking that he would get the next April increment, only to discover that he would receive what he was entitled to when he first became eligible. He was well pi$$ed.

[OJAS]

22 hours ago, Neeranam said:

That sucks as that was a reason I was thinking of delaying. 

 

The point at which your pension will be frozen could depend on the date when you reached/will reach State Pension age:

 

https://www.gov.uk/deferring-state-pension/if-you-move-abroad

 

In the unlikely event of this being before 6 April 2016 you would be best advised to clarify the position with DWP. You can contact them via their online enquiry form:

 

https://secure.dwp.gov.uk/ipc/personal-details

 

[5davidhen1]

To return to the OP's original question, and not taking into account anything regarding new/old, freezing or not, I would add the following:

If a person redeemed a pension (I'm not talking state here) at age 65, and opted for an escalating payment plan, i.e. one which increased as years go by, rather than a "flat line" example, he/she would need to survive many years for it to be a viable option.

I conducted an exercise some years back and discovered that the "break-even point" would have been 82 years of age. Also, this example doesn't take into account the potential investment value of receiving the higher amount during those first 17 years.

To sum up, whilst deferment remains a personal choice, I believe there good reasons for NOT doing so.... "A bird in the hand?"  

[steve187]

54 minutes ago, Mutt Daeng said:

I agree. A couple of years ago, a friend of mine deferred his pension for a year, thinking that he would get the next April increment, only to discover that he would receive what he was entitled to when he first became eligible. He was well pi$$ed.

maybe you get the deferred % increase, on top of the amount he would have got when he first became eligible

[Neeranam]

14 hours ago, noobexpat said:

 

I can actually calculate the consequences. But for you ....not a chance. 

Pardon me?

[Neeranam]

1 hour ago, 5davidhen1 said:

To return to the OP's original question, and not taking into account anything regarding new/old, freezing or not, I would add the following:

If a person redeemed a pension (I'm not talking state here) at age 65, and opted for an escalating payment plan, i.e. one which increased as years go by, rather than a "flat line" example, he/she would need to survive many years for it to be a viable option.

I conducted an exercise some years back and discovered that the "break-even point" would have been 82 years of age. Also, this example doesn't take into account the potential investment value of receiving the higher amount during those first 17 years.

To sum up, whilst deferment remains a personal choice, I believe there good reasons for NOT doing so.... "A bird in the hand?"  

Thanks for the advice.

[Neeranam]

14 hours ago, steve187 said:

i think that reads as, ''once you actually claim it does not increase annually'' why would you defer if there is no monetary gain- ie if you defer you lose a possible £11,000 ish 

Good point.

[samtam]

1 hour ago, steve187 said:

maybe you get the deferred % increase, on top of the amount he would have got when he first became eligible

Yes, that sounds feasible. But in order to get the deferred % (5.8%) you would not receive (in my case) GBP19,255.60 over the 24 months you deferred. At our age, (and I'm healthy and fit having just turned 67), longevity is a diminishing return on "more yesterdays than tomorrows".

[Neeranam]

I read the link provide and see if living abroad you don't get any increase, even if you defer.

Maybe just tell them I'm now living at my mother's house most of the year. 

[Mutt Daeng]

7 hours ago, steve187 said:

maybe you get the deferred % increase, on top of the amount he would have got when he first became eligible

I'm not sure if he did get the 5.8% increase for deferment. I'll ask him next time I see him & report back.

Edited April 20 by Mutt Daeng

[steve187]

5 hours ago, samtam said:

Yes, that sounds feasible. But in order to get the deferred % (5.8%) you would not receive (in my case) GBP19,255.60 over the 24 months you deferred. At our age, (and I'm healthy and fit having just turned 67), longevity is a diminishing return on "more yesterdays than tomorrows".

yes a bird in the hand

[BlueScouse]

State pension. If you delay taking your pension for less than one year then you can take the back payment as a lump sum. More than one year and a lump sum not allowed, but must take the increase payment. Deferring for one year means you must stay alive for about 16 years to get back the missing one years amount. 

[Tiber]

On 4/20/2024 at 3:49 AM, 5davidhen1 said:

To return to the OP's original question, and not taking into account anything regarding new/old, freezing or not, I would add the following:

If a person redeemed a pension (I'm not talking state here) at age 65, and opted for an escalating payment plan, i.e. one which increased as years go by, rather than a "flat line" example, he/she would need to survive many years for it to be a viable option.

I conducted an exercise some years back and discovered that the "break-even point" would have been 82 years of age. Also, this example doesn't take into account the potential investment value of receiving the higher amount during those first 17 years.

To sum up, whilst deferment remains a personal choice, I believe there good reasons for NOT doing so.... "A bird in the hand?"  

How I wish I had not commuted twenty five % of my public sector pension, would  be worth a hell of a lot more, but more tax, but then when it comes to means testing for really old age benefits, lost there too.

    Bit of a bugger really, a short time retired, got a win on Littlewoods Spot the Ball, matched the figure Id commuted, and endowment mortgage paid off with with a healthy bonus,  still its the 82 year bit, that is the gamble, not many make it.      Deferring years ago was something like 10.1%,now half the amount

[quake]

Personally, I have not delayed a pension. ( small company one )

You just don't know how long your going to live, have the money ASAP.