I am trying to get to the bottom of what I am owed for deferring my pension. I delayed taking my state pension from November 2009 until July 2014. When I started claiming, I was entitled to a basic state pension, additional state pension, and an extra state pension for deferring, made up of the basic and additional pensions. This last segment amounted to approximately £4,600 for 2015/16.
In November 2015, I decided to defer my state pension again for one year, then claimed it from November 2016. The interest for the year is only paid on the basic and additional pensions. The extra state pension is not included as it was the product of a previous deferment.
My query is what happened to the £4,600? If it was not to be used in the interest calculation, then it should have been paid to me. As it is quite a large sum of money, I cannot afford to lose this.
When you defer a state pension, you cannot choose a combination of extra state pension and a lump-sum payment.
You must opt for one or the other, and you chose the extra state pension. As you reached state pension age before 6 April 2016, this increases at a rate of 10.4% for every year you defer, but the interest is not compounded. So you only get interest on the original pension deferred, you do not get interest paid on the interest you’ve earned in previous years.
Because the increase is only payable on the original basic and additional elements of the pension, the extra state pension from the fi rst period of deferment does not get an increase. But not only does it not get an increase, it cannot be paid as a lump sum either when the state pension starts being paid again (because, as stated above, you cannot choose a combination of extra state pension and a lumpsum payment). So, unfortunately, as you chose extra state pension, you cannot have the £4,600 paid as a lump sum or get an increase on it when it comes back into payment.
Michelle Cracknell is chief executive of the Pensions Advisory Service.