Working after retirement age

candy8234

I have a public service pension, I have just passed my expected retirement date. I intend to continue working probably for 2 or 3 years more with reduced hours. I wasn't planning on taking any of my LGPS pension until I actually retired and planned to continue contributing as I have been. I don't need the income from the pension at the moment. If I did take part or all of the pension it would only be put into a savings account which as we all know attracts very little interest at the moment, so I just felt the money would be working harder in my pension pot. However it has occurred to me that it may take many years to recoup the money that would be paid to me now if I chose flexible retirement. Before I received my state pension I was able to do an on line calculation which illustrated how long it would take to recoup the money if I deferred taking my state pension, and I immediately made a decision to take it as soon as I reached state pension age based on the results of this. As my employer and I will both be contributing into my pot, and I haven't taken what I could have I assumed my LGPS pension pot would significantly increase for each year that I don't take it - however I have now started wondering whether this assumption is actually correct. I have spoken to someone in the pension department but they were not particularly forthcoming. I have requested a quote for projected figures for 2 years time which will take about a week, but this will be based on my full time salary, so won't be particularly accurate. I know there won't be any black & white answers as of course it depends on external factors, but there must be some indications as to likely best decisions to make.

Dazed_and_confused

Does either of these help?

https://www.lgpsmember.org/more/pre2014.php

https://www.lgpsmember.org/tol/thinking-leaving-when.php

hyubh

candy8234 wrote: »

As my employer and I will both be contributing into my pot, and I haven't taken what I could have I assumed my LGPS pension pot would significantly increase for each year that I don't take it - however I have now started wondering whether this assumption is actually correct.

There are two different variables here:
- The longer you stay an active member, the longer your pensionable service, so the higher your pension (in particular, the more 1/49ths you get in the CARE scheme)
- The longer you stay an active member beyond your normal pension age, the more your pension to date is subject to an 'actuarial increase' for late retirement.

If you've been in the LGPS for many years, then the second point really kicks in when you stay a member after your 65th birthday. For your CARE pension, it kicks in after you reach your state pension age (65 if that is higher).

badmemory

If you are taking your state pension then you will be paying tax on that. Even if you only get 5.8% for deferring you may be better off than taking it now. You can stop taking it if it in your interest to do so. Whilst you will probably have been contracted out which will diminish the advantage at least you may avoid some tax. You are unlikely to get 5.8% on any savings account just 5% if you have found enough accounts to fund!