State pension - quick question

chesky369

The good news is that when you reach retirement age - in your case a bit over 60 - you don't pay NI contributions on any earnings. A lot of people, me included, decide they can't afford to stop working at 60 - nor would they actually really want to, not completely anyway. I kept on for another 3.5 years and in that time I deferred taking my state pension which meant it was quite a bit larger when I did start.

SERPS stands for State Earnings Related Pension and most people have contributed to it, unless their company pension was a 'contracted out' type. This means you MAY be entitled to more than the basic state pension and the estimates don't always make this clear.

Do you pay rent or do you own your own house? You may be entitled to Housing Benefit or Council tax benefit when you retire.

I'm a Londoner, so when I got to 60 I received a freedom pass which meant that my fares to and from work were free - don't know about your situation but you should check it out.

chesky369

My comments were addressed to Jeannie, not Barneysmum.

It can get confusing.

jeannieblue

I own my house - well have a mortgage!!

It is good news that you don't have to pay NI anymore I guess.

I'll have to carry on working either way - so basically if you don't claim your pension when you can - you will increase the pension amount when you do actually retire. I wonder if it is worth it? Or claim it and put it into savings?

sleepless_saver

You can defer it if you want to. See leaflet for more info. Whether it is worth deferring or getting it now and saving it depends on what your needs are, and on the tax position. For example, if you earn £5,500 a year at age 60 and collect your pension at 60, you will in effect be paying 20% tax on your pension as your earnings mop up your personal allowance. So if your pensions totalled £10000 then you would pay about £2000 in tax each year.

If you stopped work at 65 and your pension income was £10000 a year, you would pay tax on less than £1000 of this because of the increased personal allowance, i.e about £200.

Hope this makes sense;).

jeannieblue

sleepless_saver wrote: »

You can defer it if you want to. See leaflet for more info. Whether it is worth deferring or getting it now and saving it depends on what your needs are, and on the tax position. For example, if you earn £5,500 a year at age 60 and collect your pension at 60, you will in effect be paying 20% tax on your pension as your earnings mop up your personal allowance. So if your pensions totalled £10000 then you would pay about £2000 in tax each year.

If you stopped work at 65 and your pension income was £10000 a year, you would pay tax on less than £1000 of this because of the increased personal allowance, i.e about £200.

Hope this makes sense;).

It makes perfect sense - thank you very much!

It would also make sense to not take my pension until I do retire. Its not a hard decision to make really -I really appreciate your help.

Again, thank you! Especially for explaining without a put down type attitude that you can get on some forums! We can't all know everything...

chesky369

You should get the leaflet regarding deferral of pensions from the DWP; it has a very handy calculation table which tells you to the nearest £ how much your pension will increase by, depending on your weekly sum and how long you defer for.

jeannieblue

chesky369 wrote: »

You should get the leaflet regarding deferral of pensions from the DWP; it has a very handy calculation table which tells you to the nearest £ how much your pension will increase by, depending on your weekly sum and how long you defer for.

Thank you, I will, everyone has been very helpful.

sleepless_saver

My earlier email has a link to the useful DWP leaflet with the figures in it, here it is again. It's a pdf file so needs Adobe Acrobat to read.

Jeannieblue, thanks for the thanks - I am training to be a CAB adviser so am trying to practise communicating!

chesky369

Oh sleepless, me too. In fact, I've just had my first proper interviews, with proper clients (makes me sound like some old hooker). I do so enjoy it.

jeannieblue

Sleepless & Chesky I give you both ten out of ten for people skills and knowledge/information........... unless I find that you were wrong, and then I may have to deduct points...... :eek: