State Pension Question

I too incline to next year, on the basis of the accruals principle, which holds that income is taxed when it is due, not when it is received.

Why can't pensioners afford to get it wrong?

Doesn't the state give you the equivalent of a P60 which tells you how much you were paid during the tax year?

Why doesn't the state get its act together and pay pensions monthly instead of weekly?

Not as far as I know.

When you claim your pension there is an option to receive it weekly, four-weekly (not calendar monthly) or quarterly. Nowhere, as far as I can see, does it tell you *when* in your chosen period it's actually paid - so you have to assume that it's at the *end* of the 4 or 13 week period. That being the case, most people are going to opt for weekly!

Most pensioners I know live hand to mouth, so being paid monthly or even quarterly would not suit them.

You must move in circles which contain pensioners of below average affluence. I don't believe most pensioners (and therefore most pensioners you don't know) do live hand to mouth, but even if they did, it would not follow that being paid monthly would not suit them, especially if their last job involved being paid monthly, and they are therefore accustomed to it.

Making 4-weekly an option but not monthly is just daft. People still have bills which need to be paid monthly (rent and council tax, say) and budgeting for this with a 4-weekly income is likely to prove somewhat challenging, and I guess this would tend to push people to the weekly option despite its not being ideal.

Aren't most occupational and annuity-funded pensions paid monthly?

Well, I'm certainly not in that category. I have a good occupational pension which I have been drawing for several years, and am about to start receiving my state pension. I would happily opt for monthly payment if it were at the beginning - or even the middle - of the month. But 4-weekly or quarterly doesn't appeal - so I have opted for weekly.

I suppose that since the state pension is always quoted in terms of the weekly amount, it has never occurred to DWP that some people may like to receive it at intervals which are not an integral number of weeks. Considering the state of government IT systems in general, I would hesitate to suggest anything which may add even a slight complication!

if the pension is received at the end of each period then weekly would give the receiver up to an extra three weeks to invest it and receive interest, rather than letting the government keep it and earn money from it.

But if said pensioner can afford to invest it, he will hardly be living hand to mouth. Pensions are intended to pay for life's essentials like booze and smoked salmon sarnies, not to be invested.

In any case, all you need do is forego one period's pension, once and for all (and everyone can give up booze and salmon for 4 weeks, surely), and hey presto, all of a sudden the pension will come at the start of every subsequent period.

The Inland Revenue, sorry, HMRC, tell you what they consider it to be on your notice of coding for the year. It's always different from that which I work out for myself, so I use their figure.

I realise that this is not uppermost in people's minds when deciding what to do, but what happens to pensions due when someone dies mid-period.

Do they get paid out up to date of death, or the end of the period, or for none of the period?

tim

Tom Bradbury writes

This pensioner opted for 4-weekly right from the start. I'm not worried which week of the month I was paid my first payment 8 years ago, I've forgotten. :-)

Terry Harper writes

I don't! I look at my spreadsheet and if they estimate my pension too high I tell 'em. I got a rebate and two year's back payment last time I checked the K code.

Mine gets paid on a Friday. It is paid 4 weeks in arrears. The first payment was made 33 days after I retired, and was for 5 weeks.

Many thanks for all the contributions.

I, too, am inclined to believe that the payment due of the 9th is next years, because it is paid a next year's rate, for one thing, and the opinion that a payment is taxable when it is due sounds very authoratative. Though, the book did say, as far as I can recall, that you should report what you received - I cannot find the book.

I, too, calculated that being paid weekly in advance, rather than 4 weekly in arrear, meant that I was not lending the government 3 weeks' money - for the rest of my life, which could amount to a substantial sum if I live long enough, looked at that way :-) I feel sure that the book did say that the non-weekly payments would be in arrears. As to why a 'poor' pensioner might be able to invest the money - if you have a good savings account linked to your current account (online), it matters not how poor you may be, it is still a consideration. We cannot afford to get it wrong because we can never make up any fine (loss) due to lack of further earning potential.

I have another question, on behalf of my wife. Is it worth deferring your state pension, even if you get 1% extra for every 5 week of deferral? I suspect not, but the assumptions - not to mention the calculation, seem to be tricky. At 10.4% pa, I was tempted to ask them to stop paying me for a year or two, but then I thought not :-)

A lot depends on whether you need the money now, and how long you expect to live.

Regardless of how long you put it off for, you've got to receive your enhanced pension for around 10 years before you break even - by which time you may sadly not be needing it any more.

Unless you're confident of living to a ripe old age, I'd take it *now*. If you don't actually need it, you can always invest it - at least it will then be under *your* control - not the government's!

Bitstring , from the wonderful person Roger Mills said

Plus, of course, if you have really stopped working, the tax on £25k/year for 20 years is a lot more bearable than the tax on £50k/year for 10 years. (I know the state pension isn't that big, but the same general rule applies .. spread it over as many years as you can!).

Terry Harper writes

My company pension is paid calendar monthly, so the state pension gradually catches up, so I get a big bonanza one week. ;-)

They don't get paid if they're silly enough to say that it's unnecessary to do bank reconciliations but can't list what should be done instead.

You seem to be addressing the wrong Tim, Peter.

My apologies to the wrong Tim!

Maybe the right Tim is busy preparing his list.