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  • FIRST POST
    • liketoknow
    • By liketoknow 19th Mar 17, 1:40 PM
    • 58Posts
    • 22Thanks
    liketoknow
    Being stupid or doing the right thing?
    • #1
    • 19th Mar 17, 1:40 PM
    Being stupid or doing the right thing? 19th Mar 17 at 1:40 PM
    I reached retirement age for state pension early last year. I was told that if I claimed it then - January, I would get approx £108 a week as I didn't have enough qualifying years but if I left it until April, I would get more, I qualified under the old scheme. I didn't and don't want to retire yet so I have left it in the pot to get more when I do retire. I also have a very small private pension, there was £24000 in it last year, don't know how much that would make me each week although I would probably take the 25% tax free lump sum out of it before claiming it weekly.
    I still work but only part time, I am 64. I only earn just over £5000 a year but get WTC of just over £52 a week.
    I have put off claiming my State pension, because I would lose my WTC and thinking that by saving it, I would get more when I do retire but, I am struggling with my bills.
    If I do claim my pension, I know I would lose my WTC but would be about £50 a week better off. I don't know if I would have to pay tax, although my earnings are probably set to go down a bit this year anyway.
    If I retired, I believe that my pension would be made up to £155 anyway by Pension Credit, or Universal credit as I believe it is changing to, so is there any point in my not claiming my state pension now? Doesn't it mean that I will still end up with £155 or whatever it goes up or down to, just get less Pension/Universal credit?
    I would leave my private pension where it is until I did give up work altogether. Would that be taken into consideration though when calculating how much Pension/Universal credit I would get? Or would that be on top of the £155?

    I am very confused at the moment. Thanks in advance.
    Last edited by liketoknow; 19-03-2017 at 1:43 PM.
Page 1
    • Alice Holt
    • By Alice Holt 19th Mar 17, 3:03 PM
    • 1,247 Posts
    • 1,339 Thanks
    Alice Holt
    • #2
    • 19th Mar 17, 3:03 PM
    • #2
    • 19th Mar 17, 3:03 PM
    This may be helpful:
    https://www.citizensadvice.org.uk/benefits/older-people/benefits-for-older-people/

    Do you live alone?
    Are you getting help with Council Tax?
    Do you rent or own?
    Have you got a mortgage?

    Have a look at this:
    http://www.ageuk.org.uk/money-matters/claiming-benefits/pension-credit/

    You may be eligible for savings pension credit if you reached SRP before 6 April 2016.

    Here is a PC calculator:
    https://www.gov.uk/pension-credit-calculator

    I think PC will assume an income from your private pension, but putting your numbers into the calculator is likely to confirm this.

    I think your logic is right when you say "I believe that my pension would be made up to £155 anyway by Pension Credit, so is there any point in my not claiming my state pension now? Doesn't it mean that I will still end up with £155" ....when stopping work.

    I suspect to maximise income now -
    Claim SP of £108pw (you would likely lose or reduce WTC).
    Continue working and earning £5000 pa.
    The income tax personal allowance is £11,500 for 2017/8 - so it looks you would be below that.

    Do you have any savings / emergency fund?
    It is worth considering taking a Tax Free Lump Sum from your private pension.
    Or you might be able to access it entirely under the small pots scheme see:
    https://www.pensionsadvisoryservice.org.uk/about-pensions/retirement-choices/the-right-choice-for-me/taking-a-small-pension-as-a-cash-lump-sum
    IMO the later would be preferable to taking an annuity.
    In addition to the £11.5k tax allowance, there is an additional £1k savings tax allowance so you would be unlikely to pay tax on the £24k of savings liberated from your private pension.

    When you do stop working you should be able to claim PC, and maybe Savings Pension Credit.
    See - http://www.which.co.uk/money/pensions-and-retirement/state-pension/guides/your-state-pension-and-benefits/pension-credit (this has info on how Savings Pension Credit. works).

    There are benefit calculators which would give you an indication if these options are likely to maximise your income -
    http://www.entitledto.co.uk/benefits-calculator/entitlementcalculator.aspx
    http://benefits-calculator.turn2us.org.uk/AboutYou

    Or contact the CAB
    https://www.citizensadvice.org.uk/about-us/how-we-provide-advice/advice/
    Or Age UK - http://www.ageuk.org.uk/money-matters/claiming-benefits/
    For a benefits check.

    Re: the Pension
    https://www.pensionsadvisoryservice.org.uk/ask-us
    https://www.pensionwise.gov.uk/
    Should be able to give you some guidance.

    In your shoes I would be looking at taking the SP now, continuing working, and using the trivial pension legislation to access the private pension.
    Then claim PC when you stop work.

    Hope this helps.
    Last edited by Alice Holt; 19-03-2017 at 3:15 PM.
    • liketoknow
    • By liketoknow 19th Mar 17, 3:22 PM
    • 58 Posts
    • 22 Thanks
    liketoknow
    • #3
    • 19th Mar 17, 3:22 PM
    • #3
    • 19th Mar 17, 3:22 PM
    Thank you, lots of links for me to check out.

    I'm a woman, live alone, own my own house, no mortgage (inherited). Only get single person's allowance for council tax.
    I have no savings so not going to get savings credit, although I did reach SRP age before April last year.
    I tried getting in touch with Cab for help with PIP form but couldn't get hold of them. Was going to try and get an appointment with Age UK to see if they could advise.

    I will have a look at your links, thank you.
    • liketoknow
    • By liketoknow 19th Mar 17, 3:30 PM
    • 58 Posts
    • 22 Thanks
    liketoknow
    • #4
    • 19th Mar 17, 3:30 PM
    • #4
    • 19th Mar 17, 3:30 PM
    If I took my pension under the trivial pot scheme, that would be taxed wouldn't it? I don't earn enough to pay tax now.
    I don't know if the pension scheme I was in allows taking it all as a lump sum,
    • Alice Holt
    • By Alice Holt 19th Mar 17, 3:31 PM
    • 1,247 Posts
    • 1,339 Thanks
    Alice Holt
    • #5
    • 19th Mar 17, 3:31 PM
    • #5
    • 19th Mar 17, 3:31 PM
    Currently you may have an entitlement to Council Tax support.
    Apply via your local council.
    • liketoknow
    • By liketoknow 19th Mar 17, 3:41 PM
    • 58 Posts
    • 22 Thanks
    liketoknow
    • #6
    • 19th Mar 17, 3:41 PM
    • #6
    • 19th Mar 17, 3:41 PM
    I think I looked at that but wasn;t
    • liketoknow
    • By liketoknow 19th Mar 17, 3:45 PM
    • 58 Posts
    • 22 Thanks
    liketoknow
    • #7
    • 19th Mar 17, 3:45 PM
    • #7
    • 19th Mar 17, 3:45 PM
    I have just been off work with illness (S/E) and have got behind with bills, any extra money would come in useful
    • xylophone
    • By xylophone 19th Mar 17, 4:09 PM
    • 22,057 Posts
    • 12,724 Thanks
    xylophone
    • #8
    • 19th Mar 17, 4:09 PM
    • #8
    • 19th Mar 17, 4:09 PM
    See https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/417473/pension-flexibilities-dwp-benefits.pdf

    If you (or your partner) are over the qualifying age for
    Pension Credit


    Once you (or your partner) reach the qualifying age for Pension Credit, you are expected to use your pension(s) to help support yourself. If you choose not to buy an annuity after reaching the qualifying age for Pension Credit, an amount of “notional” income will be taken into account
    when your benefit is worked out. “Notional” income (in this case) is an amount equivalent to the income you would have received if you had bought an annuity.


    If you take an income from your pension pot, the amount which will be taken into account when assessing your benefit will be the higher of the actual income or notional income. If you take a cash lump sum, this will be taken into account as capital.


    http://www.litrg.org.uk/tax-guides/pensioners-and-tax/what-state-pension-deferral
    • Alice Holt
    • By Alice Holt 19th Mar 17, 4:39 PM
    • 1,247 Posts
    • 1,339 Thanks
    Alice Holt
    • #9
    • 19th Mar 17, 4:39 PM
    • #9
    • 19th Mar 17, 4:39 PM
    If I took my pension under the trivial pot scheme, that would be taxed wouldn't it? I don't earn enough to pay tax now.
    I don't know if the pension scheme I was in allows taking it all as a lump sum,
    Originally posted by liketoknow
    See: https://www.pensionsadvisoryservice.org.uk/about-pensions/retirement-choices/the-right-choice-for-me/taking-a-small-pension-as-a-cash-lump-sum

    "If benefits are not in payment, you should have the option to take 25% of the pension value as a tax-free cash sum. The remainder is added to the rest of your taxable income in the tax-year in which you take it when determining any income tax liability"
    • liketoknow
    • By liketoknow 19th Mar 17, 6:49 PM
    • 58 Posts
    • 22 Thanks
    liketoknow
    Yes, I thought that you could have 25% as a tax free lump sum then the rest added on to income for tax purposes. I want to try and hang on to that for a while as emergency money because I know that if I claim the 25%, I'll have to then start having the monthly pension which I'd rather leave in the pot until I retire.

    I don't know anything about Annuities. I'll have to read up about it.
    • liketoknow
    • By liketoknow 27th Mar 17, 7:49 PM
    • 58 Posts
    • 22 Thanks
    liketoknow
    I've come back to say thank you to those that helped me on this thread.
    I made several phone calls and decided to take my state pension which started yesterday.
    I was quite amazed at how soon I was able to get it, I only phoned last Monday.
    They are going to write to me with the figures for the deferred lump sum. I am unsure at the moment whether to take it as a lump sum or leave it and have extra pension when I give up work. It seems a bit silly to leave it in though as it stopped accruing interest on the day I started claiming my pension. It might be better to get an ISA which would be earning interest as I don't know how many years I am going to carry on working for, probably several as I like my job and can pick and choose my hours.
    I doubt that I will be able to get Pension Credit as with the old works pension added on, it would probably not apply, although at this stage, I don't know how much I would be getting from that. I am leaving that where it is for the time being. Alice mentioned that I might be able to get savings credit, I didn't think I would qualify for that as I don't have any savings but apparently my works pension would qualify for it. That pension has been in for over 30 years.
    Thanks again for all your help. I might come back again asking what to do about the deferred lump sum.
    • xylophone
    • By xylophone 27th Mar 17, 8:44 PM
    • 22,057 Posts
    • 12,724 Thanks
    xylophone
    http://www.litrg.org.uk/tax-guides/pensioners-and-tax/what-state-pension-deferral

    Is the private pension you mention in your first post a deferred Defined Benefit pension?

    Do you have a pension with your current employer and/ or are you contributing to any other pension?
    • liketoknow
    • By liketoknow 27th Mar 17, 9:01 PM
    • 58 Posts
    • 22 Thanks
    liketoknow
    To be honest, I haven't got a clue as to what sort of pension it is. I was working at the time and when you reached a certain age, you had to join their pension scheme, I was in my 20's at the time. I am 64 now. I never really took any notice of it, it was just taken out of my wages. When I left there, I went to a company that didn't have a pension scheme, so left it where it was. Then I went self employed. I remember years ago, I did get in touch with them to find out how much was in and was told around £6000, I thought to myself that that wasn't going to be worth much when I retired and more or less forgot about it. I didn't really pay much into it but with the interest building up over around forty years, when I asked about it last year, it had grown to around £24,000.
    I am self employed now and have not taken out any other pensions.
    Someone on here mentioned Annuities but I don't really know what they are.
    • BobQ
    • By BobQ 27th Mar 17, 9:58 PM
    • 9,548 Posts
    • 12,356 Thanks
    BobQ
    To be honest, I haven't got a clue as to what sort of pension it is. I was working at the time and when you reached a certain age, you had to join their pension scheme, I was in my 20's at the time. I am 64 now. I never really took any notice of it, it was just taken out of my wages. When I left there, I went to a company that didn't have a pension scheme, so left it where it was. Then I went self employed. I remember years ago, I did get in touch with them to find out how much was in and was told around £6000, I thought to myself that that wasn't going to be worth much when I retired and more or less forgot about it. I didn't really pay much into it but with the interest building up over around forty years, when I asked about it last year, it had grown to around £24,000.
    I am self employed now and have not taken out any other pensions.
    Someone on here mentioned Annuities but I don't really know what they are.
    Originally posted by liketoknow
    You joined a company pension in your 20s. How long did you stay working for that employer? Was it a public sector job or a private sector job?

    If you did not meet the number of qualifying years why was that? You must have been out of work for many years? Were you a carer? Abroad? Ill? Do you agree that you did not meet the number of qualifying years?
    Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.
    • liketoknow
    • By liketoknow 27th Mar 17, 10:13 PM
    • 58 Posts
    • 22 Thanks
    liketoknow
    It was private sector, I worked for them for around ten years but did not qualify to join the pension scheme until about half way through. The company closed the branch I was working at, I got offered employment at another branch 40 miles away but I left as I did not want the travelling. I think I was around 25 when I qualified for their pension scheme.

    Re NI, I have never been out of work. I cared for my dad who had Alzheimers, I was self employed at the time and had to run my business down a lot to care for him. I did not claim any benefits although I could have claimed carer's allowance. I did agree that I did not meet the number of qualifying years, some years I was short as I just could not afford the stamps. I have only ended up about £8 short of the Basic rate pension anyway with just over £111 a week. I had 27 fully paid up years and 20 which were short.
    • xylophone
    • By xylophone 28th Mar 17, 12:18 AM
    • 22,057 Posts
    • 12,724 Thanks
    xylophone
    Just because it was a private sector company does not mean that the pension was not defined benefit.

    You would expect a deferred pension to increase in deferment.

    What was the normal retirement age for the scheme?


    If you have reached scheme pension age (or if this is a DC pension and you are over PC age) you would be expected to apply for the pension before you could be considered for eligibility for Guarantee Pension Credit.

    Does your state pension statement show a contracted out deduction?


    You realise that you can still contribute to a pension scheme and obtain tax relief?
    • liketoknow
    • By liketoknow 28th Mar 17, 3:06 AM
    • 58 Posts
    • 22 Thanks
    liketoknow
    Just because it was a private sector company does not mean that the pension was not defined benefit.

    You would expect a deferred pension to increase in deferment.

    What was the normal retirement age for the scheme?


    If you have reached scheme pension age (or if this is a DC pension and you are over PC age) you would be expected to apply for the pension before you could be considered for eligibility for Guarantee Pension Credit.

    Does your state pension statement show a contracted out deduction?


    You realise that you can still contribute to a pension scheme and obtain tax relief?
    Originally posted by xylophone
    I really have no clue what sort of pension it is, I've not thought about it for years. That works pension is still gaining interest as I have not touched it. Its the deferred part of the State pension which has stopped now that I have started receiving weekly payments.
    I emailed the management company of the works pension a few weeks ago, asking about it, how much I would get if I took it in April and what happens to it if I die before I have claimed it. They just wrote back saying what would happen to it when I die and said that when I gave them a date of retirement, they could give me the figures. I had said I only wanted a rough idea. Without the figures, I wouldn't know if I wanted it yet.
    A new management company is taking over at the beginning of April, so I will write to them and ask.
    I think it could be drawn from 55 years old but not 100% sure.

    I don't want Pension Credit yet as I am still working and will be for the forseeable future. That is also why I want to hang onto the works pension, I don't think I will be eligible for PC, but would be for Savings Credit with having the other pension.

    I don't know where to look to see if my State pension has a contracted out deduction but I would assume so as I was paying into the works pension.

    I had not thought about contributing into a pension scheme. I don't earn enough to pay tax anyway and even with my pension added to my earnings, I don't think I will. If I draw the deferred state pension as a lump sum, I will regulate my earnings in 2017/2018 so that I stay below the personal allowance and therefore not have to pay tax on it. Its just knowing what is best to do with it when I do draw it, I would like it to be earning some sort of interest otherwise there is no point in drawing it yet.
    Last edited by liketoknow; 28-03-2017 at 3:10 AM.
  • jamesd
    Sigh. The works pension could totally change the best thing to do. That may mean that your income is too high to qualify for Pension Credit/Universal Credit. If it is too high then the best thing to do with the state pension would be to pay for three missing years and defer claiming it, using your private £24,000 pension to help fund this.

    The extra state pension from deferring increases with inflation every year if you don't choose the lump sum option. The lump sum option is usually a bad deal.

    You do not need to take a regular income from a private pension or buy an annuity. You can take 25% as a tax free lump sum and leave the rest in "flexible drawdown" which lets you take out any amount as taxable money whenever you like. No charge to do this at places like Hargreaves Lansdown and you can just transfer if the place where it is now doesn't offer flexible drawdown.

    Normal pension age from the works pension was probably 60 but it could be 65. Usually there is no increase for taking it later than the normal pension age but sometimes there is.

    Fortunately you can still defer the state pension once even after claiming it. So once you get the answer from the works pension you can start to defer again if that looks like a good move, which it probably is.

    You can pay to make up missed state pension years at least as far back as six years using normal rules but if you reached State Pension age between 6 April 2010 and 5 April 2015 you can go back as far as 1975 to pay for incomplete years. I think that one doesn't apply to you but there's a other one for a man born after 5 April 1951 or a woman born after 5 April 1953 that lets you pay for gaps between April 2006 and April 2016. I think you probably can find three incomplete years within that time range and just pay for the cheapest three to get you to thirty years total.
    Last edited by jamesd; 28-03-2017 at 3:48 AM.
  • jamesd
    You can get about £720 a year of free money by continuing to make pension contributions. More for a few years. You can make pension contributions up to your earned income or £3,600 a year, whichever is higher, after tax relief.

    So if you can get it done in time you could take the tax free lump sum from the private pension, pay 80% of your self-employment earnings into a pension then take out 25% of that also as a tax free lump sum. Then taxable money as needed. After talking the taxable money you can pay in only up to £4,000 after tax relief not your full earnings. You get the tax relief added even if you pay no tax.
    • xylophone
    • By xylophone 28th Mar 17, 1:55 PM
    • 22,057 Posts
    • 12,724 Thanks
    xylophone
    I really have no clue what sort of pension it is
    I suggest that you find out.

    That works pension is still gaining interest as I have not touched it.
    It isn't gaining interest. It may have been increasing in deferment, either by statutory increases/ scheme pension rules/ late retirement increases (DB) etc or (if DC) by investment gains.

    Do you have any information at all among your papers about this pension?

    It is quite possible that you may have been better advised to continue defer the state pension and draw the private pension.

    With regard to pension contributions, even if you contributed £2880 to a SIPP, the pension provider would claim tax relief of £720 - you could draw the tax free lump sum, leave the rest within the pension, do the same in the next tax year......

    http://forums.moneysavingexpert.com/showthread.php?t=5580163

    doesn't only apply to the retired.
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