By Frank Conway
According to some media reports today, one can receive a higher State pension if they defer claiming it.
At present, the State pension pays out €253 per week. Claimants must be age 66 or more to qualify. However, if they defer their claim for up to 5 years, the weekly payment would increase to €315 according to media reports.
Clearly, the State is using the reach of the media to test the idea for reaction.
Doing some quick sums, those that defer would lose and the State would be the winner. However, there is an upper age limit where the maths of deferment would support those that defer but this is not something that would benefit the vast majority of the population as most would probably have died before they reach that age (I did the maths and the numbers don’t really add up to defer!).
Additionally, from a broad financial wellbeing perspective, the time to have money is when one is younger and in a position to be able to actually enjoy it.
Statistically, as one ages, the risk of ill health and general immobility means that more personal wealth will be directed towards personal care, not personal enjoyment.
What I would have expected from the latest State pension proposals would have been a fairly generous premium to those that defer. Instead, they would be facing a very real financial discount, event if they live beyond the expected upper age limit in Ireland presently.
Perhaps the State is simply testing the waters on this one. Maybe they want people to examine the maths and perhaps, after getting some public reaction, they may re-examine the proposals. However, as they have been presented in the media, they are not a good deal!