My state pension is almost double the £11,973 that most people receive.
It’s all thanks to some key tricks that not many pensioners know about – and lots of persistence to get what I am entitled to.
I found that not even Government departments fully understand how the rules work – I would have lost out on thousands of pounds if I had backed down when I was told I was wrong.
Here’s how I did it: I spent my working life looking forward to taking early retirement from my 25-year long career as a retail store manager.
Right from my 20s, I’d been planning to retire when I reached my 50th birthday and saved as much as I could. But when I got there, it was not all it was cracked up to be.
I tried fell walking, fly fishing and golfing but I quickly got bored and realised that, in fact, I hate golf.
Rewards: Graham Moss originally retired at 50. but quickly got bored and went back to work
So at the age of 51, I went back to work. It went so well that when I turned 65 and a letter came through the door telling me I could claim my state pension at £9,175 a year, I decided not to.
I knew something that lots of people don’t. You are rewarded for every year you do not claim your state pension.
Every year I left mine untouched, the amount that I would receive when I did claim it increased by 10.4 per cent.
That is because I reached state pension age before April 6, 2016 – anyone eligible for the state pension after this date now gets 5.8 per cent.
I held out until the age of 68, by which time my payments were worth a nice £15,000 a year.
But after claiming it for 18 months, I decided I could still do without it and decided to pause it to get even higher payments.
I phoned the Government’s pensions department, but was told I couldn’t pause it because you are only allowed to stop and restart your pension once.
However, I persisted because I knew I had only paused my payments once – the first time I delayed rather than stopped them.
After six or seven phone calls, I finally got through to someone who understood the rules.
It was not until four years later that I decided it was time to start claiming my state pension again.
You can delay for as long as you like, but it needs to be for at least nine weeks to receive higher payments.
You cannot defer your state pension if you receive certain benefits, such as pension credit or universal credit, but this didn’t apply to me.
The value of my personal pension had fallen by 40 per cent due to volatility in the stock market and I needed time to rebuild it again. The income from my state pension would get me through.
Even then, I was given incorrect information about what I was entitled to, so I had to do my own calculations and stick to my guns.
My advice to anyone who decides to defer and restart their pension and is offered the wrong amount: do not give up when you know you are right.
The Department for Work and Pensions has since apologised for the level of service I received. I held out until I hit my 70s and my payments were worth around £18,500.
Since then they have risen at the same rate as everyone else’s every year – although the deferred element increases by inflation rather than the state pension triple lock. Now I’m 75 my pension is £20,621.
Of course, the approach I took is not for everyone. Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners – an online investment service of which I am a client, says: ‘Deferring a state pension can be beneficial for some people, particularly those that are still working and in good health, as the state pension payment, plus their regular income, could push them into a higher tax bracket.’
You will need to see if the numbers add up for you. Someone aged 66 who defers their state pension for 12 months this financial year could miss out on up to almost £12,000 of state pension and could be in their 80s before they recoup the full amount, according to Haine.
Hold back: You are rewarded for every year you do not claim your state pension but you are only allowed to stop and restart your pension once
This is Money and the Daily Mail’s retirement columnist Sir Steve Webb says there are some vital things to consider when delaying your state pension, which we outline in brief below.
Read the full guide: Steve Webb’s five golden rules on deferring state pension
1. If you do anything which is not straightforward when taking your state pension (other than claiming it on time) you risk facing delays and hassle which is simply not worth it if you are only going to delay for a few months.
2. Broadly speaking, deferral is designed to be a ‘fair deal’ from which the Government doesn’t gain or lose overall; but some people will tend to gain if they defer and others will tend to lose.
For example, if you are in good health and are likely to have a long retirement, you will probably benefit because your enhanced pension lasts for a long time. Conversely, if you are in poor health, then you may not get back the money you missed by deferring.
3. Under the current system you get a higher pension at a rate of 5.8 per cent extra for each year of deferral. The only exception to this is that you can backdate your claim by up to 12 months and take a lump sum for that period; no interest is added to this lump sum.
4. You can’t use deferral as a way of getting benefits on the grounds of low income. If you defer your pension and try to claim pension credit, you would be treated as if you had claimed your pension in any case.
5. One potential advantage of deferral is if you are still working, and in particular if you have a relatively high income. Your tax-free personal allowance will probably be exhausted by your wage, so your state pension will be taxed in full.
If this takes you into higher tax brackets you could end up paying 40 per cent or more on a slice of your state pension. Deferring to a point where you don’t have earnings could avoid this risk.
As told to Samantha Partington
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