Being stupid or doing the right thing?

liketoknow

I reached retirement age for state pension early last year. I was told that if I claimed it then - January, I would get approx £108 a week as I didn't have enough qualifying years but if I left it until April, I would get more, I qualified under the old scheme. I didn't and don't want to retire yet so I have left it in the pot to get more when I do retire. I also have a very small private pension, there was £24000 in it last year, don't know how much that would make me each week although I would probably take the 25% tax free lump sum out of it before claiming it weekly.
I still work but only part time, I am 64. I only earn just over £5000 a year but get WTC of just over £52 a week.
I have put off claiming my State pension, because I would lose my WTC and thinking that by saving it, I would get more when I do retire but, I am struggling with my bills.
If I do claim my pension, I know I would lose my WTC but would be about £50 a week better off. I don't know if I would have to pay tax, although my earnings are probably set to go down a bit this year anyway.
If I retired, I believe that my pension would be made up to £155 anyway by Pension Credit, or Universal credit as I believe it is changing to, so is there any point in my not claiming my state pension now? Doesn't it mean that I will still end up with £155 or whatever it goes up or down to, just get less Pension/Universal credit?
I would leave my private pension where it is until I did give up work altogether. Would that be taken into consideration though when calculating how much Pension/Universal credit I would get? Or would that be on top of the £155?

I am very confused at the moment. Thanks in advance.

Alice_Holt

This may be helpful:
https://www.citizensadvice.org.uk/benefits/older-people/benefits-for-older-people/

Do you live alone?
Are you getting help with Council Tax?
Do you rent or own?
Have you got a mortgage?

Have a look at this:
http://www.ageuk.org.uk/money-matters/claiming-benefits/pension-credit/

You may be eligible for savings pension credit if you reached SRP before 6 April 2016.

Here is a PC calculator:
https://www.gov.uk/pension-credit-calculator

I think PC will assume an income from your private pension, but putting your numbers into the calculator is likely to confirm this.

I think your logic is right when you say "I believe that my pension would be made up to £155 anyway by Pension Credit, so is there any point in my not claiming my state pension now? Doesn't it mean that I will still end up with £155" ....when stopping work.

I suspect to maximise income now -
Claim SP of £108pw (you would likely lose or reduce WTC).
Continue working and earning £5000 pa.
The income tax personal allowance is £11,500 for 2017/8 - so it looks you would be below that.

Do you have any savings / emergency fund?
It is worth considering taking a Tax Free Lump Sum from your private pension.
Or you might be able to access it entirely under the small pots scheme see:
https://www.pensionsadvisoryservice.org.uk/about-pensions/retirement-choices/the-right-choice-for-me/taking-a-small-pension-as-a-cash-lump-sum
IMO the later would be preferable to taking an annuity.
In addition to the £11.5k tax allowance, there is an additional £1k savings tax allowance so you would be unlikely to pay tax on the £24k of savings liberated from your private pension.

When you do stop working you should be able to claim PC, and maybe Savings Pension Credit.
See - http://www.which.co.uk/money/pensions-and-retirement/state-pension/guides/your-state-pension-and-benefits/pension-credit (this has info on how Savings Pension Credit. works).

There are benefit calculators which would give you an indication if these options are likely to maximise your income -
http://www.entitledto.co.uk/benefits-calculator/entitlementcalculator.aspx
http://benefits-calculator.turn2us.org.uk/AboutYou

Or contact the CAB
https://www.citizensadvice.org.uk/about-us/how-we-provide-advice/advice/
Or Age UK - http://www.ageuk.org.uk/money-matters/claiming-benefits/
For a benefits check.

Re: the Pension
https://www.pensionsadvisoryservice.org.uk/ask-us
https://www.pensionwise.gov.uk/
Should be able to give you some guidance.

In your shoes I would be looking at taking the SP now, continuing working, and using the trivial pension legislation to access the private pension.
Then claim PC when you stop work.

Hope this helps.

liketoknow

Thank you, lots of links for me to check out.

I'm a woman, live alone, own my own house, no mortgage (inherited). Only get single person's allowance for council tax.
I have no savings so not going to get savings credit, although I did reach SRP age before April last year.
I tried getting in touch with Cab for help with PIP form but couldn't get hold of them. Was going to try and get an appointment with Age UK to see if they could advise.

I will have a look at your links, thank you.

liketoknow

If I took my pension under the trivial pot scheme, that would be taxed wouldn't it? I don't earn enough to pay tax now.
I don't know if the pension scheme I was in allows taking it all as a lump sum,

Alice_Holt

Currently you may have an entitlement to Council Tax support.
Apply via your local council.

liketoknow

I think I looked at that but wasn;t

liketoknow

I have just been off work with illness (S/E) and have got behind with bills, any extra money would come in useful

xylophone

See https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/417473/pension-flexibilities-dwp-benefits.pdf

If you (or your partner) are over the qualifying age for
Pension Credit

Once you (or your partner) reach the qualifying age for Pension Credit, you are expected to use your pension(s) to help support yourself. If you choose not to buy an annuity after reaching the qualifying age for Pension Credit, an amount of “notional” income will be taken into account
when your benefit is worked out. “Notional” income (in this case) is an amount equivalent to the income you would have received if you had bought an annuity.


If you take an income from your pension pot, the amount which will be taken into account when assessing your benefit will be the higher of the actual income or notional income. If you take a cash lump sum, this will be taken into account as capital.

http://www.litrg.org.uk/tax-guides/pensioners-and-tax/what-state-pension-deferral

Alice_Holt

liketoknow wrote: »

If I took my pension under the trivial pot scheme, that would be taxed wouldn't it? I don't earn enough to pay tax now.
I don't know if the pension scheme I was in allows taking it all as a lump sum,

See: https://www.pensionsadvisoryservice.org.uk/about-pensions/retirement-choices/the-right-choice-for-me/taking-a-small-pension-as-a-cash-lump-sum

"If benefits are not in payment, you should have the option to take 25% of the pension value as a tax-free cash sum. The remainder is added to the rest of your taxable income in the tax-year in which you take it when determining any income tax liability"

liketoknow

Yes, I thought that you could have 25% as a tax free lump sum then the rest added on to income for tax purposes. I want to try and hang on to that for a while as emergency money because I know that if I claim the 25%, I'll have to then start having the monthly pension which I'd rather leave in the pot until I retire.

I don't know anything about Annuities. I'll have to read up about it.

liketoknow

I've come back to say thank you to those that helped me on this thread.
I made several phone calls and decided to take my state pension which started yesterday.
I was quite amazed at how soon I was able to get it, I only phoned last Monday.
They are going to write to me with the figures for the deferred lump sum. I am unsure at the moment whether to take it as a lump sum or leave it and have extra pension when I give up work. It seems a bit silly to leave it in though as it stopped accruing interest on the day I started claiming my pension. It might be better to get an ISA which would be earning interest as I don't know how many years I am going to carry on working for, probably several as I like my job and can pick and choose my hours.
I doubt that I will be able to get Pension Credit as with the old works pension added on, it would probably not apply, although at this stage, I don't know how much I would be getting from that. I am leaving that where it is for the time being. Alice mentioned that I might be able to get savings credit, I didn't think I would qualify for that as I don't have any savings but apparently my works pension would qualify for it. That pension has been in for over 30 years.
Thanks again for all your help. I might come back again asking what to do about the deferred lump sum.