Deferring UK State Pension - Extra Pension Or Lump Sum?

Posted by Paul Davies on 16/12/09 13:33

Global QROPS Ltd’s clients, that are due to retire, have the option of deferring their UK State Pension benefit entitlements. UK State Pension deferral is an important option for those clients who are still receiving employment income and also for those migrating clients that are moving to a jurisdiction where indexation is not available to their UK State Pension in payment.

If an individual reaches UK State pension age and decides to defer taking their UK State Pension, what benefits can they eventually receive?

The first option is to receive an extra State Pension in addition to your weekly State Pension. This would be payable for life. By selecting the income option, an individual can receive an additional 1% of their weekly State Pension entitlement for every 5 weeks that the State Pension is deferred. This is the equivalent to a 10.4% increase for every year deferred.
The second option, that Global QROPS Ltd would like to speak to their retiring clients about, is the one-off lump sum UK State Pension payment. In order to have this as an option you would have to defer taking the UK State Pension benefits for at least one year.

The one-off lump sum payment, that an individual can receive, is calculated using the amount of State Pension that the claimant could have receive, within the deferral period plus interest – which is at least 2% above the bank of England base rate. The regular State Pension income is then commenced.

Global QROPS Ltd are available to speak to migrating clients, who are approaching retirement, regarding their options.