Deferment of UK Pension

Yorky

Yorky

Fullritis Member
Having read the UK Government publications (on the net) the way I see it is:

If you defer your pension for 1 year, i.e. until you reach 66, the following years you will recieve your normal pension plus 10% (e.g Sterling 6,000.00 p.a. will be 6,600.00 p.a.) from then on. You will not be paid the 6,000.00 which you have not claimed by deferring your pension.

A collegue here deferred his pension in October 2013 and claims to have just received a lump sum of c. 8,000.00 from the UK Government.

Am I missing something here?
 
Yorky said:
Having read the UK Government publications (on the net) the way I see it is:

If you defer your pension for 1 year, i.e. until you reach 66, the following years you will recieve your normal pension plus 10% (e.g Sterling 6,000.00 p.a. will be 6,600.00 p.a.) from then on. You will not be paid the 6,000.00 which you have not claimed by deferring your pension.

A collegue here deferred his pension in October 2013 and claims to have just received a lump sum of c. 8,000.00 from the UK Government.

Am I missing something here?
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If you choose to defer claiming the UK state pension, no action is needed.

Your State Pension will increase by 1% for every 5 weeks you put off claiming. This is the same as 10.4% for every full year you put off claiming.


Example
You get the full State Pension of £115.95 per week.
Your basic State Pension will be £6,029.40 a year.
By deferring for a year, you’ll get an extra £627 (10.4% of £6,029.40).



Lump sum payment

You may choose to get a one-off lump sum payment if you put off claiming your State Pension for at least 12 months in a row. This will include interest of 2% above the Bank of England base rate.





NOTES


1) If you defer and choose the higher pension option in the example above, you will receive an extra £627 less tax once you claim and receive it, BUT will have lost the £115.95 per week for all the weeks that you deferred. That could take up to 10 years to recoup. Note also that most people get more than the basic £115, due to GRP and Additional Pension (formerly SERPS)


2) If you go for the Lump sum payment after minimum 1 year you will receive £6,029.40 + (interest of 2% above the Bank of England base rate which is currently 0.5% I believe). You will not have had access to YOUR money for 1 year.


3) If your normal retirement date is before 6th April 2016, deferring will NOT allow you to receive the new minimum of approx £150 a week. No matter how long you defer you will be paid under the current rules.



My recommendation is NOT to defer.
 
Prakhonchai Nick said:
If you choose to defer claiming the UK state pension, no action is needed.

Your State Pension will increase by 1% for every 5 weeks you put off claiming. This is the same as 10.4% for every full year you put off claiming.


Example
You get the full State Pension of £115.95 per week.
Your basic State Pension will be £6,029.40 a year.
By deferring for a year, you’ll get an extra £627 (10.4% of £6,029.40).





Lump sum payment

You may choose to get a one-off lump sum payment if you put off claiming your State Pension for at least 12 months in a row. This will include interest of 2% above the Bank of England base rate.





NOTES


1) If you defer and choose the higher pension option in the example above, you will receive an extra £627 less tax once you claim and receive it, BUT will have lost the £115.95 per week for all the weeks that you deferred. That could take up to 10 years to recoup. Note also that most people get more than the basic £115, due to GRP and Additional Pension (formerly SERPS)


2) If you go for the Lump sum payment after minimum 1 year you will receive £6,029.40 + (interest of 2% above the Bank of England base rate which is currently 0.5% I believe). You will not have had access to YOUR money for 1 year.


3) If your normal retirement date is before 6th April 2016, deferring will NOT allow you to receive the new minimum of approx £150 a week. No matter how long you defer you will be paid under the current rules.



My recommendation is NOT to defer.
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Nick, are you saying that the UK pension is only 115 quid a week? If that's correct, how could anyone retire and continue to live any kind of a decent life?
 
Surin said:
Nick, are you saying that the UK pension is only 115 quid a week? If that's correct, how could anyone retire and continue to live any kind of a decent life?
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Correct! And, if living as an expat (not ordinarily resident in the UK) in many parts of the world, including Australia, Canada and Thailand to name but three, your pension will never receive any index linking or any other changes. It will be frozen in time at the initial rate forever. And yes, for those that have their state pension as their only and sole source of income in retirement their quality of life is very limited.

However, as a British expat living in the Philippines you will, surprisingly, receive index linking and any other increases to your state pension. Furthermore, I am assured that obtaining a long stay visa to live in the PI's is a lot easier than trying to stay long term in Thailand. I had a friend whose basic UK state pension was too low to qualify for a long stay visa for Thailand based on either marriage or retirement. He left Thailand and headed off to the PI's when they stopped back-to-back 30 day border runs some 5 or 6 years ago.

As I understand, if you return to the UK on a permanent basis you will receive a fully restored pension. For those that took their state pensions many years ago that is something that may be worth thinking about. I think the same applies to those living in the PI's although further research would be required to confirm this. With the soon to be introduced minimum state pension of £150 or so, one wonders how many more will pack their bags and head further East, either with or without a six month sojourn in the UK along the way.
 
nomad97 said:
With the soon to be introduced minimum state pension of £150 or so, one wonders how many more will pack their bags and head further East, either with or without a six month sojourn in the UK along the way.
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Unfortunately 116 [or 150) quid/week wouldn't even pay my beer bill in UK! Whereas it almost does here in LOS (at the present time).
 
A quick visit to a "non frozen" country is sufficient for you to claim the increased pension whilst there.

I believe it is necessary to spend 183 days a year in a non frozen country to ensure your state pension will be increased in line with inflation annually. Rather than return to the UK, one could consider 183 days in nearby Phillipines, and then back to Thailand for the remaining 182 days.

SF could have an outreach forum for those that live temporarily in PI
 
Surin said:
Nick, are you saying that the UK pension is only 115 quid a week? If that's correct, how could anyone retire and continue to live any kind of a decent life?
Click to expand...


Most -but not all - people have an occupational pension to go with the state pension.

The current £115/week is based on full employment/payment of National insurance for 30 years (previously 44 years) Anything less and the pension is reduced pro-rata. From April 2016, a minimum of 35 NI contributions are needed to be eligible for approx £150/week, but there will still be some that do not get the fullamount.

I do know of someone locally who exists on just over 8,000baht a week. He survives, but not much more.
 
Prakhonchai Nick said:
Most -but not all - people have an occupational pension to go with the state pension.
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Luckily, I do.

Prakhonchai Nick said:
The current £115/week is based on full employment/payment of National insurance for 30 years (previously 44 years) Anything less and the pension is reduced pro-rata. From April 2016, a minimum of 35 NI contributions are needed to be eligible for approx £150/week
Click to expand...

I assume I will not be eligible for the 150 quid/week living here?

Prakhonchai Nick said:
I do know of someone locally who exists on just over 8,000baht a week. He survives, but not much more.
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I lived on roughly that for 4 years! Piece o' piss.

[Edit: I did/do have a few bob in the bank for emergencies though. Up here for thinking, down here for dancing!]
 
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Looks like i better start paying my NI contributions again. Gulp!
 
Prakhonchai Nick said:
Most -but not all - people have an occupational pension to go with the state pension.

The current £115/week is based on full employment/payment of National insurance for 30 years (previously 44 years) Anything less and the pension is reduced pro-rata. From April 2016, a minimum of 35 NI contributions are needed to be eligible for approx £150/week, but there will still be some that do not get the fullamount.

I do know of someone locally who exists on just over 8,000baht a week. He survives, but not much more.
Click to expand...



(He drinks Arch a.... and eats Mama noodles)


..err... that was just over 8,000 Baht per MONTH!
 
CO-CO said:
(He drinks Arch a.... and eats Mama noodles)


..err... that was just over 8,000 Baht per MONTH!
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MONTH! Now that is a completely different kettle of fish! That wouldn't pay my electric, UBC, water and internet bills! Or the cleaner.
 
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