Taking Final salary pension while still working part time.

LinHy

I've reached 60 and am now able to access my Final Salary Pension of just over £9k per annum. I want to continue working part time, and taking into account the pension, my earnings will still keep me in the lower tax bracket. I know I will pay tax on my pension sum, but surely its still to my advantage to take the pension now and be approx £600 better off per month, or am I missing something? 

Marcon

LinHy said:

I've reached 60 and am now able to access my Final Salary Pension of just over £9k per annum. I want to continue working part time, and taking into account the pension, my earnings will still keep me in the lower tax bracket. I know I will pay tax on my pension sum, but surely its still to my advantage to take the pension now and be approx £600 better off per month, or am I missing something? 

If you can access your pension without any reduction for early payment (i.e. 60 is the normal retirement age of the scheme in question), and taking your pension now won't push you into a higher rate tax bracket (which it doesn't), then no, you probably aren't missing something!

Secret2ndAccount

I would just throw one thing out there. Check the date on which you receive inflation increases, and see what those increases are before you take the pension, and after you start to take it. Many pensions have, for example, a 5% cap on annual increase. Before you take the pension, the growth is averaged over the duration of your pension accumulation. Since the average is well below 5% per year, you get the full, potentially 10.1% increase for this year. Once in payment, the increase for this year might be capped at 5%. So, by waiting one year, or even part of a year (until Jan 1st or Apr 6th) you could be 5% better off for life. This would also apply to any lump sum which is calculated as a multiple of your annual pension.
It depends completely on the particular rules of your scheme, but it could be worth considering a short delay before claiming. Get hold of your scheme rule-book.

daveyjp

Its not clear if the part time job is with the same employer.

If it is the OP should ask their employer about flexi retirement options.

DE_612183

I take a FPS and work as well - my tax code is split between the two so I have some tax free allowance on both,
All seems fine to me.

Indout96

I did this during Covid to help out and have now stuck to two days a week and love it. I took two pensions, a Final salary from one employer for which i got figures to take then (58 & 3/4) and also at 60, very little difference. I also converted a second pension to a SIPP which was going great until the downturn this year but it will pick up.
I love the part time life but my wife is older and also retired so life is good.
the only thing negative is that once you have started taking the pension you are restricted to what you can actually pay in to any ongoing pension scheme - I think its around £4k / year but not got paperwork with me.

LinHy

Thank you all for the useful comments, I will definitely check the date on the inflation increase before I take it.

Albermarle

Indout96 said:

I did this during Covid to help out and have now stuck to two days a week and love it. I took two pensions, a Final salary from one employer for which i got figures to take then (58 & 3/4) and also at 60, very little difference. I also converted a second pension to a SIPP which was going great until the downturn this year but it will pick up.
I love the part time life but my wife is older and also retired so life is good.
the only thing negative is that once you have started taking the pension you are restricted to what you can actually pay in to any ongoing pension scheme - I think its around £4k / year but not got paperwork with me.

If you take a DB pension, then the MPAA ( which restricts you to max £4K pa pension contributions in future) does not apply. If you took taxable income from the SIPP?DC pension then it would apply.

zagubov

Can you check there isn't a limit on how much you can earn post-retirement. In education for example you can't receive a full pension if your resulting overall income takes you above your Salary of Reference.
Other occupations may have different rules.

mtc95

I am also doing what you are considering - taking a DB pension while continuing to work part-time. 

One thing you might want to bear in mind (if you have not already) is that your pension scheme may pay a higher amount if you delay when you start taking it.  In my case I waited until after my 61st birthday and get a higher pension than if I had drawn it at 60.  It wasn't a massive difference but of course, it applies for as long as I live.  It also has an effect on the pension my wife will get from the scheme if I die before her.

Albermarle

mtc95 said:

I am also doing what you are considering - taking a DB pension while continuing to work part-time. 

One thing you might want to bear in mind (if you have not already) is that your pension scheme may pay a higher amount if you delay when you start taking it.  In my case I waited until after my 61st birthday and get a higher pension than if I had drawn it at 60.  It wasn't a massive difference but of course, it applies for as long as I live.  It also has an effect on the pension my wife will get from the scheme if I die before her.

That is a good point, although you are probably lucky with your pension. AFAIK most pensions do not increase if you do not take them at the Normal Retirement age. Not by more than inflation anyway.