small pension due but still working, defer?

Baalmaiden

I have a small pension from a former employer which I shall be able to get from October when I am 60. However I can't afford to retire before I get my state pension at age 66. However I can manage on what I earn so am thinking of deferring the works pension. It was a combination of final salary and defined contribution and should be worth about £1500 a year if I take it at 60 and I would have to pay tax it. I have enquired and can defer it. Should I do so or take the money now as annuities may get even worse. Or should I just take out the 25% I can take without paying tax?
I must comment that the new rules have made things complicated for ordinary folk who don't earn much and don't have the benefit of paid advisors. It seems that the rich are most likely to benefit from them.
thanks in advance

LHW99

While annuitiy rates (for the DC part) may get worse, you would be older if you leave it longer.
Also the final salary part is not an annuity, but depends on your pay while you were employed.

There will be other considerations that others here can / will flag up

hyubh

Baalmaiden wrote: »

I have a small pension from a former employer which I shall be able to get from October when I am 60. However I can't afford to retire before I get my state pension at age 66.

What's it to do with your former employer whether you are still employed by someone else? Assuming, that is, they aren't linked for pensions purposes.

However I can manage on what I earn so am thinking of deferring the works pension.

If it's from a 'former' employer surely the DB part is already deferred? (A 'deferred' DB pension is one you aren't actively contributing to, but isn't yet in payment.) Assuming the normal pension age for it is 60, do you get an actuarial increase by delaying, and if so, how do the numbers stack up? If your income will be a lot less once you retire full stop then an increased pension for continuing to defer may be worth it (keeping in mind pension income - including the state pension - is taxable income), however your claim to be 'ordinary' and not 'rich' suggests drawing it at the scheme's NPA might be a better option.

xylophone

annuities may get even worse.

You don't have to buy an annuity even under current rules and a Final Salary pension is not a purchased annuity.

You say the pension is a mixture of a DB and a DC scheme.

Do you mean that the employer closed a DB scheme (and you have a pension from that portion) and opened a DC scheme and you have a "pot" from that?

https://www.pensionwise.gov.uk/ might be of interest.

Does your current employer provide a pension?

Have you obtained a state pension forecast?

https://www.gov.uk/government/news/millions-more-offered-free-pension-statement

If you defer drawing the old pension, will it continue to increase in deferment?

kidmugsy

Baalmaiden wrote: »

I must comment that the new rules have made things complicated for ordinary folk who don't earn much and don't have the benefit of paid advisors. It seems that the rich are most likely to benefit from them.
thanks in advance

What a preposterous complaint. Oh dear, the govt proposes to treat you like an adult and you're not comfortable about that. Diddums.

[Deleted User]

kidmugsy wrote: »

What a preposterous complaint. Oh dear, the govt proposes to treat you like an adult and you're not comfortable about that. Diddums.

How rude is that??

Baalmaiden

Phew! Yes Missu, it was rude, but if I express an opinion I can expect to be shot down for it.

In the end as an adult I have to make my own mind up, but I was interested to see what people thought.
Actually I have asked for an estimate of what I would accrue if I defer. This is a firm I left in 2000 and the pension was deferred, but I was wondering whether to defer it further, which I can do till age 75. It was unusual in that it combined the 2 types of pension.

I know MSE is all about wheeling and dealing to find the best prices and in the current world we have to do it to make the most of our money. However, not everyone has the internet, has good enough maths to understand percentages, interest rates etc. or a relative or friend to help them. These people are at a disadvantage in the current climate and vulnerable to the unscrupulous Rich people can pay for help, poor people can't. Complicated systems also end up costing a lot more to administer and the people who are loyal to banks and energy firms usually end up paying for it.
By keeping things simple you are not being patronizing but actually making it more possible for the less able to manage their own affairs.

xylophone

It was unusual in that it combined the 2 types of pension.

How? (See questions in my post above)?

mgdavid

Baalmaiden wrote: »

...... It was unusual in that it combined the 2 types of pension........

or is it in fact two separate pensions, as is the norm in this situation? If you could answer the questions and provide more details you will get far better quality replies, best stick to facts as opinions are at best a distraction.

david78

Usually there is no benefit for delaying payment of a final salary scheme past the normal retirement date. You just lose payments.

hyubh

david78 wrote: »

Usually there is no benefit for delaying payment of a final salary scheme past the normal retirement date. You just lose payments.

Depends on the scheme.