Defer pension

nevertoold

Hi I will be 60 next month and plan to keep working until I am 65. I have a small pension that I want to defer. I do not pay any money into this pension scheme. They are giving me 2 options - which is the best route to take?

1. We will carry forward the value of any MVR guarantee that you have on this retirement date to any future retirement date. An MVR may still apply whenever you take retirement benifits
2. I would like a new MVR guarantee at my new retirement age. I undestand that my new retirement age must be at least five years in the future and that an MVR may apply in full if retirement benefits are taken at any earlier date.

Thank you for any help/advise you are kind enough to give.

EdInvestor

What MVR applies now and who is your provider?

Have you considered taking the pension and reinvesting the money in a tax free ISA (same investement options as pension)?

Would taking the pension next month affect your tax band?

nevertoold

Norwich Union and the fund estimate on 9 Dec is £15861.
No MVR to be calculated on 9 Dec example uses £5000.
I won't change my tax band lower level.
Had not thought about taking cash, my cash ISA is full for this year are there any other tax free bonds I can have or can I use the money for other things double glazing for house.

Many thanks sorry if not enough info.

steady__eddie

I have a query which is nearly identical to that of the original poster.
60 next month and could receive pension, plan to work (economy permitting) until 65 and do not contribute to scheme.
Provider is L.G.P.S. I have written to them expressing an interest to defer until 65th birthday but I am unable make a decision from it all.
I know that I am going to be taxed (basic rate payer) if I elect to receive it next month, is N.I. payable on it ?
Could anyone please tell me if there are any advantages in defering it for 5 years or should I just take it and pay the tax ?
We are only talking peanuts here, Annual pension £2804.22 p.a. which would be about £2243 net (assuming not liable for N.I.).

MikeJones_2

Hi steady_eddie,

steady__eddie wrote: »

I know that I am going to be taxed (basic rate payer) if I elect to receive it next month, is N.I. payable on it ?

The pension will not be subject to National Insurance.

steady__eddie wrote: »

Could anyone please tell me if there are any advantages in defering it for 5 years or should I just take it and pay the tax ?

Normally, when pension benefits from a defined benefit scheme are deferred beyond Normal Retirement Date, the benefits enjoy some form of increase until the scheme member decides to draw them. Ask your pension manager what 'interest' or 'increases' that your benefits will get.

steady__eddie wrote: »

We are only talking peanuts here, Annual pension £2804.22 p.a. which would be about £2243 net (assuming not liable for N.I.).

Every little helps. And you've not mentioned the tax free cash lump sum, which I presume you already know about?

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a current member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

steady__eddie

"Normally, when pension benefits from a defined benefit scheme are deferred beyond Normal Retirement Date, the benefits enjoy some form of increase until the scheme member decides to draw them. Ask your pension manager what 'interest' or 'increases' that your benefits will get."

I have already posed this question and the reply was, "Your benefits will continue to increase annuallly in line with the Retail Price Index". From this response, I presume, should I choose to start drawing the pension next month, it will be fixed at £2804.22 p.a. until my demise ? Somewhere in the back of my mind, I was under the impression that the benefits when payable were index linked ? If this is the case, then there would appear to be no incentive to defer it except for the increase in the lup sum payable ?

"Every little helps. And you've not mentioned the tax free cash lump sum, which I presume you already know about?"

"This had not escaped my attention , the way that things are going, I reckon that there may be a decent BOGOF offer on a new motor come the New Year.