Member Article

LEBC comment on Government reduction in rate of increase on state pension deferral

“The reduction in the increase on State pension deferral from 10.4% pa to 5.8% from April 2016 is quite a big step change and may cause many who are deferring their State pensions to reconsider whether that is the right thing for them to continue to do” says Kay Ingram, divisional director of individual savings and investments at financial planners LEBC. “That said, the deferral rate previously in place was quite generous and had not been overhauled for some time. While inflation and interest rates remain low, the 5.8% rate may still be attractive to some who are not yet drawing their pensions. “If, as widely predicted, interest rates will start to increase later this year, the deferral rate will increasingly look like less good value. “Whether an individual should defer or not depends entirely on personal circumstances, including their health, the extent to which they have other income sources and the rate of income tax which they would pay if they received it now. This should be looked at by each person not as an isolated decision but as part of a comprehensive review of their retirement income options.”

This was posted in Bdaily's Members' News section by LEBC Group Ltd .