Can you delay receipt of pension

Centenial

I have a small pension which is due to start paying out on my 60th birthday later this year. I am continuing to work full time, and intend to do so until I reach my statutory retirement age of 66. My issue is that I do not need the additional income from the pension, and prefer to defer receipt of this until the time that I need it more. I am just a higher rate taxpayer, and so any additional income will be tax at the higher rate, making it less useful. If I could delay receipt of the pension until I fully retire I would then only pay tax at the standard rate. Are there any steps I can take to achieve this?

peterg1965

I guess it depends on what type of pension it is; Defined Benefit or Defined Contribution? Also whether the pension provider allows you to delay taking the pension.

You could also consider taking the pension and then putting additional money into another personal pension to take the 40%/20% tax relief and to bring you down below the HigherRate Tax Threshold, provided this doesn't contravene the HMRC recycling rules.

What is your other pension provision? this could also have a bearing on the right course of action.

Alexland

Depends on the scheme rules, why not ask them and how it would boost the payout and we can debate if their offer is good value. However even if its not good value it might still be worth it to avoid 40pc tax.

Drp8713

It depends, if it is a DB scheme, and has no provision for late retirement factors, and 60 is your normal retirement age, then no.

The higher rate tax thing is a non-issue.

If your pension is £1000 a year (plus inflation) then you defer it for six years and it still £1000 a year plus inflation, then you have gained nothing.

If your pension is £1000 a year (plus inflation) and you take it for six years, you will have £6000 (plus inflation) less 40% tax = £3600

£3600 is better than £0. If there is no tangible benefit to deferring you are just throwing away money.

dunstonh

Most personal pensions can be deferred until you want them. Indeed, the selected retirement age is really only there for statement projections only. Some caveats to that as lifestyle funds and some with-profits funds may also use that age.

Certain types of pension can be deferred but have no benefit. Some Section 32 buy out bonds may cease to impove value beyond the scheme age. Many DB schemes have no benefit going beyond scheme age either.