Still working - can I draw pension? -

Lou3000

I'm 62 but still working full-time. I have only been in my full-time job for 3.5 years and love it and it's the first job I've had which pays not a bad salary (£18,000+ a year).

But previous jobs to this have been poorly paid so we haven't been able to put anything by and time marches on!

So, when I hit pension age, I knew I would keep on working so haven't collected my pension.

But we need to get a new car (well, not new, but one that's reliable) as hubs works 15 hrs a week for 6.75 an hr at a cleaning job which requires him to travel to 2 different locations so it's a 20-mile round trip each day.... if we have car trouble, there is no public transport as back up so I'm worried.

So, I read on MSE about being able to collect a lump sum of deferred pension. I figured I could collect the 2 yrs due and get a car with that.

But, can I do that if I still work full-time? Can I collect lump sum and then continue to draw pension (plan on saving it)

I've googled for info but no answers to that specific kind of question, so can anyone here advise or advise where I could get the info.

Thanks in advance!

molerat

Yes you can but remember you will pay tax (indirectly through your work) at 20% on all of the weekly / monthly pension payments.

Lou3000

Thanks for your reply! My husband did wonder about that so I guess the best thing to do would be to work out how much my pension would be and what the tax on it would be.

We will definitely need a replacement car soon and the only way we could afford it would be a bank loan but I've not long paid off all my bank loans and don't really want to go down that route again!

But again, thanks for your help!

Loughton_Monkey

You need to seperate two things. Firstly, is it possible? Answer is yes. Perfectly possible. Drawing your state pension in whatever form is you right, irrespective of your employment status.

Secondly, you need to ask if it's a 'good idea'. Only you can decide that.

The government has recently started offering these options. Deferral of you pension can result in either a higher pension, or a lump sum in lieu. What you propose doing is 'mortgaging' your future income, and using it to buy a depreciating asset. I'm not saying this is wrong, but just understand the financial implications of what you propose.

xylophone

http://www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/@en/@over50/documents/digitalasset/dg_200597.pdf

jamesd

A loan is probably better than taking your state pension when you don't need to. The state pension goes up by 10% for each year you defer taking it and you get that extra payment for life. A loan costs you money just for the duration of the loan. So it'd probably be better to get a loan and start taking the state pension after a few years, using the extra income to clear the loan quickly then.

Lou3000

Well, that's certainly food for thought! I'll print off the info xylophone (thank you so much) and read it in depth.

I hadn't thought about the loan option but to pay it off early with the pension pot - so thanks for that, well worth considering!

Lou

jamesd

I wasn't suggesting taking a lump sum and using that to pay it off. I was suggesting taking the higher income and using that. The higher income is the version that is most valuable long term for someone in normal health.