NHS pension..any benefit in deferring

Stubod

Hi all,

many thanks for the replies...I think I now understand that the pension would be worth more if it is differed....(also noting the other points mentioned), so thanks for clearing it up and appols for being a bit dull...I guess its a case of making some assumptions and running some numbers....technically we have some savings to bridge the gap, but not sure whether I could get used to the idea of "zero income".(..but that's my problem...)

kidmugsy

robin61 wrote: »

For me I worked out all things considered that it would take around 20 years to start making a profit from deferring

Surely that depends on what inflation does. You didn't just ignore that, did you?

kidmugsy

Stubod wrote: »

I think I now understand that the pension would be worth more if it is deferred....

Don't neglect Robin's point: if you are going to receive two decent State Pensions at 67, then starting her occupational pension early may not be a dreadful move. On the other hand: as for living without income for a couple of years (i) maximise use of contributions to personal pensions, followed by drawdown in tax years when she has little or no taxable income (ii) consider other ways of bridging the gap e.g. cheap borrowing, 0% credit cards, etc.

In the end it's probably sensible to follow whatever course of action leaves you both most comfortable with your decision. The point of wealth is to give you comfort and security, after all.

robin61

kidmugsy wrote: »

Surely that depends on what inflation does. You didn't just ignore that, did you?

Absolutely you need to put some sensible assumptions into the calculation. It's a while since I looked at this but I think I put 2% in my calculation. Might be spot on or it could be miles out but this seemed reasonable.
But then if you had the money spent funding the first couple of years invested over say an 18 to 20 year period you need to allow some assumptions for compound interest on that amount compared with the interest gained once you start making a profit on defering.

atush

Stubod wrote: »

Hi,

and thanks for the replies, but does not really answer the question (my fault for not making it clear)..

I understand that the pension will be worth less if taken early (approx £1k for each year not worked)..however spouse is adamant that they will be "going early" by at least 2 years....ie spouse retiring anyway at 58.....the question is...is there any advantage to not take the pension at 58 but to postpone actually drawing the (reduced) pension for another 2 years? (eg I am aware that if you delay taking the state pension the amount you finally get will increase for each year it is deferred)....

thanks..

The spouse is free to "go early".

However, they dont need to take their pension early.

Just save out side it. Cash, DC pension, S&S isas. All for this purpose?

HOWMUCH

If she can work to the end of a complete pension year, I joined 1st September and will retire 30th September. I am working the extra 2 months past my 60th because my pension is worked out in pension years. The extra month is for people taking annual leave so therefore helping the department out. Her pension is worked out on the previous 12 months to the date she finishes. So are the other 2 years and the highest paid 12 months is used. You can used the NHS pension calculator. I have also taken a larger lump sum to reduce the pension for tax purposes when I get my state pension. I can not remember any benefit in deferring her pension for 2 years, but will read through my retirement package information I was given.