To delay pension or not,that is the question

Cagey

My wife has just received a letter from the pension service asking her if she wanted to receive her pension at 60 or delay taking the pension. As she intends to work on in any case the decision she has to make is , is it worthwhile taking her pension or not. She works part time and must be on the tax borderline as she pays tax some months and not others. My thoughts are that if she took her £62 p/w pesion she would pay an additional £13.64 p/w (approx) tax.

Am I correct ? and do you have any other advice on the subject.

Thanks in advance.

CIS

The most tax she would pay would be 22% of the £62p/w or the £13.64 you calculate - normally the tax code of the employment is adjusted to take in to account the value of the pension, so effectively as she has an annual pension of £3224, she has around £1811 of her employed earnings tax free and then tax is paid on the rest - so I work it out that she would get her £62pension, then £34.83 of her earnings tax free , 10% tax would be paid on the next £41.35 earned per week and then 22% of the rest.

To work out whther deferral is an option look here
http://www.thepensionservice.gov.uk/pdf/spd/spd1apr06.pdf

Cagey

Thanks for the confirmation & information CIS.

Titan

I would be inclined to take the pension as the payment is going to be the same (almost) if she takes it latter, so might as well take as much as she cans while she can!

Only reason I would not be inclined for this is if she were making some decent money from some savings account and the difference between being taxed on it or not was the pension... even in that situation I'd probably give a good though at taking the pension.

Just my thoughts...

Titan

Cagey

Thanks for that Titan,we are leaning towards that option but the thought of handing the gov` almost £14 p/w hurts. If she delays then she will be entitled to an additional 10% of her pension for each year she delays but losing out on £60 a week a year for the sake of an additional £6 p/w does not seem to be a great deal. My thoughts are that she should cut down her hours to avoid tax & take the pension. Any thoughts folks?.