We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

Deferring Pension

Options
I have 2 final salary pensions from former employers payable in about 4 months.


My pension from my current job is also final salary but payable in 2020, or earlier with deductions, and I plan to continue working for a couple more years.


Combined the 2 payable from 2015 are about £4,500, so I will pay about £900 tax.


Is it best to take the pensions and pay the tax or defer them until I give up work when I wont be paying any tax (I will leave work at the beginning of a tax year so will have a year unused tax allowance).


Any suggestions appreciated.

Comments

  • Different pension schemes have different rules for how much, if at all, pensions are increased if they are deferred beyond normal retirement age.

    Do both your pensions increase if they are deferred for, say, 2 years? If so, then how much?
  • xylophone
    xylophone Posts: 45,609 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Are you permitted to defer them? When do you reach state pension age?
  • I know one of them, the larger one, doesn't increase, would only be a tax saving, the other I'm not sure of.
  • xylophone wrote: »
    Are you permitted to defer them? When do you reach state pension age?
    Yes I am permitted to defer them. I wont reach state pension age until 6 years after these ones are payable and 1 year after my current employers pension payable
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    SeekTruth wrote: »
    Do both your pensions increase if they are deferred for, say, 2 years? If so, then how much?

    Spot on.

    Suppose that they don't increase. Then if the income is surplus, and the tax annoying, you could always make a contribution to a personal pension, with the aim of doing an income withdrawal in that first year of retirement, to use up your personal allowance. You could even make contributions big enough to let you aim to defer your third final salary pension until 2020, or closer to it.
    Free the dunston one next time too.
  • atush
    atush Posts: 18,731 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    if they dont increase with deferral, why not take them.

    And invest 100% of that income into a personal pension?
  • kidmugsy wrote: »
    Spot on.

    Suppose that they don't increase. Then if the income is surplus, and the tax annoying, you could always make a contribution to a personal pension, with the aim of doing an income withdrawal in that first year of retirement, to use up your personal allowance. You could even make contributions big enough to let you aim to defer your third final salary pension until 2020, or closer to it.
    Yes the income would be surplus at the moment but would I still not have to pay the tax on it when it is paid to me if I did that? My thoughts were that I would like the income for my first year of retirement and just want to avoid giving any back to the government ifI can
  • mgdavid
    mgdavid Posts: 6,710 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Yes tax is liable on the pensions when you take them, but if you pay the same amount into a PP or SIPP then the tax is credited back and addded to the PP/SIPP.
    The questions that get the best answers are the questions that give most detail....
  • mgdavid wrote: »
    Yes tax is liable on the pensions when you take them, but if you pay the same amount into a PP or SIPP then the tax is credited back and addded to the PP/SIPP.
    Thanks, sounds good, will look at that
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 351K Banking & Borrowing
  • 253.1K Reduce Debt & Boost Income
  • 453.6K Spending & Discounts
  • 244K Work, Benefits & Business
  • 598.9K Mortgages, Homes & Bills
  • 176.9K Life & Family
  • 257.3K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.