Any point deferring a DB pension?

troubrs

I have 3 pensions - one worth around £500 p.a. from a very old job & into which I paid a little when I wasn't working. I then have a DB pension from 17 years at one Company, worth around £16,000 p.a (I left that Company in 2009). & my current one, which is tiny (about £250 p.a.) but paying into as employer contributes 3% so for me at 51 it's like a savings plan & when I retire I plan simply to take the lot as a lump sum. I can draw from my DB pension at 55 in 4 years' time, but have no intention of retiring then, I've started over again a new career, & although the pay is low, would not need to supplement it at 55. So, should I take my DB pension at 55, or would there be any benefit in deferring it? Alternatively should I start taking it to re-invest? There's no danger at all of me becoming a higher rate taxpayer again.

redbuzzard

Is this a typical occupational DB pension (i.e. not a public sector pension)?

What is the scheme's normal retirement age? Presumably not 55? Waiting until normal retirement date if that is 60 or 65 is not "deferring" and taking it earlier would mean a substantial reduction in the starting pension and, ultimately, in the amount of inflation linked income you have.

For example, I have a DB pension that I could take now, at 62 (next month) but the reduction in pension would be 18% for me as compared with waiting until 65.

So to answer your question, whether it is worth it for you is an individual decision, based on your own circumstances.

jamesd

What is normal retirement age for the DB pension? Is it 55?

This matters a lot. Few DB pensions increase payments if you defer beyond the normal retirement age and if they do, it tends not to be lucrative, usually no more than actuarial average gain. Worth checking, but probably not worth deferring.

But if the normal retirement age is not 55, you're penalised for taking it early. Such penalties tend to be greater than the cost to the scheme of you taking it early and you tend to lose a lot by doing it. So it seldom pays to take the pension early.

So: deferring probably isn't worthwhile, but check, but be sure it really is deferring, not taking it less early than normal.