Do You Realise How Much Your State Pension Is Worth ?


Last month’s inflation rate of 3 per cent can be good news for those over state pension age. The September figure is considered for the annual up-rating of state pensions, and should see a boost (subject to budget confirmation !) of around £4.80 a week depending on the individual level of state pension.

This lifts the new state pension (ie retirement post April 2016) to around £8,570 a year. An inflation-linked annuity for that amount for a 65-year-old today would cost just over £266,000.

The opportunity to top up state pension closed earlier this year but there is still scope for people to close gaps in their National Insurance record to make sure they are getting the maximum entitlement.

But what about state pension deferral? Retirees can be reluctant to not claim something they have contributed all their life for, but it can make sense.

If you reached state pension age after April 2016, your state pension will increase every week you defer, as long as you defer for at least 9 weeks. It will increase by the equivalent of 1% for every 9 weeks of deferral, which works out at just under 5.8% for every full year.

The extra amount is paid with your regular State Pension payment.

What if you die before the higher state pension pays back the missed payments? It is a risk but remember too the deferred state pension can be taken as a lump sum so if a health concern emerged during deferment this could provide a useful escape route.

What about tax ? If taking the state pension now means paying a higher rate of tax than if the state pension was deferred for a few years, then the numbers could look convincing to defer.

If you would like to discuss the pros and cons of deferring your state pension when it is due, please contact us >>

Written by Fiona Ruck | Financial Adviser

Fiona joined Mantle FInancial Planning in September 2013 Read more >>

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