Pensions Forecast

Linda1212

Hi, I'm a newbie so bare with me...!

I am female and will be 60 in August 2009 and I have had a pension forecast from the Govt Pensions Service. My weekly pension from August 2009 will be £128.66 but if I defer it - say for a year - I will get a further 10.4% interest on the £128.66 = £66.90 per week (£195.56) for life plus a lump sum of £10,220.

My query is - I intend to stay working full time for as long as possible so if I defer this pension which will give me an annual sum of £10,220 on top of my £17,000 salary how long should I leave claiming it before I get hammered in paying a high threshold tax, obviously I will pay 20% after a year but I only get the chance of claiming it once so I need to know how long to defer claiming - 1,2,3 years????

Any advice will be gratefully received as the tax thing is so complicated!!!

Linda

EdInvestor

The lump sum from deferring the state pension will not push you into a higher tax bracket.

dunstonh

You will see a further reduction in your age allowance though (at age 65). That in effect is a tax increase.

EdInvestor

Linda1212 wrote: »

My weekly pension from August 2009 will be £128.66 but if I defer it - say for a year - I will get a further 10.4% interest on the £128.66 = £66.90 per week (£195.56) for life plus a lump sum of £10,220.

Not sure these figures are correct.

Pobby

This gives some examples.
http://www.thepensionservice.gov.uk/state-pension/deferral/what-are-my-choices.asp

Linda1212

Hi EdInvestor.....just re-read my forecast again which I asked for over a five year deferral period that has confused me (not difficult!) I've requested another forecast now for a 2 year period which should be easier to fathom out. I just want to make sure I make the right decision of whether to go for the extra pension or a lump sum (whichever is more tax friendly on top of my salary!)

Many thanks, Linda

oldandgrumpy

Hi dunstonh,
I thought the tax free allowance INCREASED at 65, thus giving a decreased tax burden....from £6000 odd to £9000 odd. or am I at odds with what you are saying?

jem16

oldandgrumpy wrote: »

Hi dunstonh,
I thought the tax free allowance INCREASED at 65, thus giving a decreased tax burden....from £6000 odd to £9000 odd. or am I at odds with what you are saying?

It does unless you have taxable income of £21,800pa. At that point you start to lose your extra allowance by £1 for every £2 over the limit. By around £28k you are back at the basic personal allowance.