Deferring State Pension

But surely it shouldn't be a gamble. It's a financial deal. I give the government my pension for them to invest and gain interest. They give some of that interest to me for allowing this. So far so good. But then they keep my accrued pension if I die, How is that fair?

Can you imagine any other pension provider getting away with this?

You say you don't understand how pensions work. With workplace pensions, the firm has to have a certain amount of money put aside in a pension fund to cover the pensions it expects to be paying. This fund is invested and gains interest so it keeps up with inflation and so on. Robert Maxwell infamously used his firm's pension fund for other purposes and couldn't pay it back, which led to a tightening up of regulations.

State pensions are paid out of general funds. There isn't a bank account labelled "Pension money, do not touch", so there isn't any interest gathering on the money you don't get - it just doesn't exist.

Actuaries work out life tables on the total amount people would get if they started receiving their pension at the earliest opportunity and lived to an average life expectancy for someone of that age, and the total if they started at different ages and lived to the average age of someone the age when they start it. The pension you actually receive is calculated using those tables. The average total cost to the government per person is about the same whichever way you do it.

I deferred mine for 7 years, and now benefit from a considerable extra amount at a time I need it. When I was working it would have gone in tax. I had the choice of extra each week or a lump sum, I chose the extra weekly amount.

Thanks for taking the time to explain elegran.

I knew that actuarial tables would be used as in in the private systems. However, I did expect that there was a section in the government's coffers for pensions - I can now see that this is obviously not the case.

I won't be deferring my pension - I'll invest it elsewhere.

sadly no pension fund ,the government are now hoping we all die before they have to pay us...I've worked since 1970,never had time off for kids or illness ,always paid the "big stamp" and still do so the government has done me out of tens of thousands of pounds by bringing forward the age rises .My friend who NEVER paid NI EVER gets the equivalent of a full pension .I realise its a social security thing and everyone must have an income ,this just seems very unfair ...I'm now 63 and I STILL haven't had any communication from the DWP .I WONT be deferring my pension IF I ever get one !

The government, in offering this choice, is taking a calculated risk, and the pensioner likewise. You're taking a gamble on living long enough to get the enhanced pension. If everyone who chose to defer the pension had the right to claim the money for their estate if they died, the system would collapse - it relies on those who die early subsidising the pensions of the long-lived.

You don't have to do it. When we were offered the choice, we thought, "Do we know we'll live long enough to benefit? No. Do we trust future governments to honour the agreement? No. Do we want to end up paying more tax (because the money is coming in a lump or at a higher rate, rather than being spread thinly across all the years)? No. We decided to take what was offered as soon as it was available.

In fact, my husband - despite being a fit, well nourished and otherwise healthy man for his age - died of prostate cancer at 68 - so it turned out to be the right decision for us, as the deferred money would have been lost to us..

Same here, grannyticktock. My husband was diagnosed with a brain tumour two months after he started receiving his state pension - although he wasn't particularly fit and well before that.
He died four months later, and I started getting a bit more pension from his funds.
I always think take it when you can, because you never know what is going to happen.

That's one of the reasons I decided not to defer when i was eligible but still working part time. You don't know with successive governments what could happen with your accrued pension pot.

I did defer my pension for a couple of years and this came in very handy as it improved my income when it came to applying for a new mortgage.

I shouldn't defer if I were you.

www.bbc.co.uk/news/business-40826562

www.waspi.co.uk/

Waspis don't have any choice, though, but to defer.
Very unfair.

??????

Their pensions have been deferred for them?

Deferred without any compensating rise in the amount eventually paid out.

That's why I said it was very unfair.