Tuesday, March 17, 2020

State pension: What are different deferral rates for basic and new state pension?

State pension currently falls into two categories. There is the new state pension and the basic state pension. What kind a person falls into depends on when they reached state pension age. The main difference between the two is how much income they pay out.


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Basic state pension can be claimed if the person is a man born before 6 April, 1951 or a woman born before 6 April, 1953.

Under this state pension, the most a person can receive is £129.20 per week which requires 30 years of national insurance contributions.

The new state pension can be claimed by a man born on or after 6 April, 1951 or by women born on or after 6 April, 1953.

The payments available from the new state pension are higher but they require more national insurance contributions. The full amount that can be received here is £168.60 per week but this will require a minimum of 35 years of national insurance contributions.

While people receiving basic state pension will likely get less than people on the new system, they will have beneficial elements in other areas.

Some people on the basic state pension may be in the process of delaying their payments, which will increase their amounts.

If a person qualifies for full basic state pension and they defer their payments for 52 weeks they’ll get an extra £13.44 a week.

This is a boost of 10.4 percent which is nearly double the rate offered under the new state pension.

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The new state pension can also have payments deferred and raised but they will be at a lower rate.

Under the new system, state pension will increase by just under 5.8 percent for every 52 weeks of deferment.

With both systems, the person involved will usually not need to take any action to differ their payments.

State pension is not paid automatically, it has to be claimed.


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People will usually receive a letter from the state around two months before they reach state pension age.

This letter will detail what the persons options are and what they’ll need to do next.

If a person wishes to defer they will not have to do anything. State pension payments will automatically be deferred until they are claimed.

It should be noted that any extra payments from deferment could induce a tax charge.

Once a person is ready to receive income they will need to take action to claim a deferred pension.

If the person has deferred for less than a year, they will be able to claim their state pension online.

However, if a person has deferred for more than a year they will need to contact the pension service to claim.

It is possible in certain circumstances to inherit a state pension from a partner, however this can only be done if the person involved has reached state pension age.

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