Should I take my state pension?

johntin11

I am nearly 66 and still working, at the moment I am putting around £20000 a year into my pension.
If I take my state pension and carry on working does that mean I will only be able to put £10000 max yearly into my pension? Is taking the state pension classed as accessing my pension?
Which would then mean I will not be able to continue putting £20000 into my pension?
I have looked for this answer but I haven't been able to find it.
So, should I take my state pension or defer it whilst I carry on working?

Dazed_and_C0nfused

johntin11 said:

I am nearly 66 and still working, at the moment I am putting around £20000 a year into my pension.
If I take my state pension and carry on working does that mean I will only be able to put £10000 max yearly into my pension? Is taking the state pension classed as accessing my pension?
Which would then mean I will not be able to continue putting £20000 into my pension?
I have looked for this answer but I haven't been able to find it.
So, should I take my state pension or defer it whilst I carry on working?

No, taking your State Pension does not impact the amount you can contribute.

Whether you should defer it or not is a different thing altogether, but deferring or taking it won't impact the amount you can contribute to a workplace or personal pension.

Stubod

If you defer your state pension it increases by 1% for each 9 week period you defer it for. So if you defer for a year, then you gain around 5%. I think you need to live for around 18 years to start seeing the benefit for defering for 12 months, (so a bit of a health lottery?).

HappyHarry

You could just take the state pension and contribute more to your personal pension (earnings permitting).

xylophone

While the state pension  (or any pension) does not count as relevant earnings for pension tax relief, if you took your SP, you could regard it as income replacement which could enable you to contribute more from your relevant earnings to your workplace pension.

Example.

Let's suppose a person earns £30,000 a year.

He has a workplace pension (relief at source).

He normally contributes £8000  a year from his post tax salary to his pension and the provider adds tax relief of  £2000 and adds it to his pot.

He reaches SPA and claims his state pension (let's say £12,000 a year) while continuing to work.

He decides that he now has more income than he needs so he increases his pension contribution  from salary to £16,000 a year - the

provider now adds tax relief of £4000 a year to his pension pot.

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100

badmemory

Also deferring may be a good idea if taking it will mean paying 40% tax rather than 20%, if it will be at 20% in the future, although deferring now is not as good as it used to be.

johntin11

Thank you all for your fast response and the great comments. They are really useful in helping me. 
I don't really want to carry on working and take my pension as I am a 40% tax payer.
My main problem in not retiring is my wife is 5 years younger than me, so 7 years away from getting her state pension. Whilst the children were growing up she was a stay at home mother and now has a small part time job, with a small pension.
For a number years I have been giving her an additional £400 a month out of my income to put into a pension. This amount will not see her through till she is able to receive her state pension.
I have not been claiming the tax back on this £400 as I would not know how to and didn't realise I could until someone told me I might be able to.
If I claimed my state pension is there anyway I can pay this pension to my wife without myself paying the 40% tax on it?
It would be great if I could share my pension with her for tax purposes, although I believe this is not possible.
Thanks in advance,
John

xylophone

Has your wife obtained a state pension forecast?

https://www.gov.uk/check-state-pension

I have not been claiming the tax back on this £400 as I would not know how to and didn't realise I could until someone told me I might be able to.

You can't claim relief on money paid into another person's pension.

In respect of your own pension contributions, does your scheme use 'relief at source" or "net pay"?

See https://www.litrg.org.uk/pensions/paying-pensions/tax-relief-pension-contributions/how-tax-relief-given-pension-contributions

johntin11

My wife has not obtained a state pension forecast. I will ask her once she comes home from work.
Thank you for answering the part about tax relief on my contribution to her pension.
My own pension contribution is relief at source.
Thabk you.

Ciprico

If you've been giving your wife £400 a month to put in her pension, providing you put the tick in the right box (something like contribution is being made from taxed income) her pension company should automatically have reclaimed basic rate tax back ?

If she plans to retire early she can pull £12.5k pa tax free from her pension, so it may be worth while stuffing as much as you can in there to take advantage of her tax free allowance until her state pension cuts in...

johntin11

Thanks Ciprico, you say put as much into her pension as I can. Which I agree with, however isn't it true that I can only put in a maximum of what she earns per year. Or am I able to put more than what she earns per year?