Should I take my state pension?

johntin11

"When you say you contribute to this pension do you actually mean that you have reduced your salary by 11% so that the whole contribution is an employer contribution?"
It looks that way although I have never thought of it like that. 
On my wage slip there is my contribution and then there is the companies contribution which includes my contribution, 26% in total.

"If you draw your state pension you could use it to contribute to this pension and claim higher rate relief as above?"

This could well be a good thing to do, thank you.

johntin11

One more question which I have not found the answer to. 
I believe, once a person is 66 they stop paying national insurance. What happens to that money? 
Does it go into my pot that I pay tax on? In my case will I pay 40% tax on it?
Therefore my tax payment would go up and not down. 
Or will I pay no tax on that portion of my pay?

HappyHarry

Before state pension age you pay income tax and national insurance on your earnings. After state pension age you pay income tax but not national insurance on your earnings. This means your take home pay is higher as you are not paying national insurance. The income tax paid on your earnings would remain the same.

xylophone

I believe, once a person is 66 they stop paying national insurance.

See

https://community.hmrc.gov.uk/customerforums/ni/079dcffc-4c59-ee11-a81c-0022480003c7

 and relevant links in my posts

https://forums.moneysavingexpert.com/discussion/comment/80728542/#Comment_80728542

https://forums.moneysavingexpert.com/discussion/comment/80731022/#Comment_80731022

With regard to the salary sacrifice arrangement, in terms of NI, 

https://mattioliwoods.com/sites/default/files/2021-01/Mattioli Woods salary sacrifice do's and don'ts Jun 2020.pdf

With more employees working beyond state pension age, it is worth emphasising that they don’t pay NIC, hence salary exchange does not save them any money. The employer must still pay NIC on these earnings, so there is still a saving available to the business. 

dealyboy

@MetaPhysical said:

I have done quite a lot of reading that states it's hardly ever worth deffering your SP for most people.  The only exception is if you are still working past state pension age and a higher rate tax payer - both boxes that you tick.

I deferred for 45 weeks to avoid paying income tax on the state pension in the year (2020/21) in which I reached state pension age, stopped working and had earnings over the personal allowance. This deferral continued in the following tax year when I cashed in a small pot. I have avoided income tax since and receive full new state pension and extra state pension (for the deferred period). I am likely to start paying income tax, with the state pension(s) being over the personal allowance, in 2026/27 due to frozen tax thresholds.

GrubbyGirl_2

johntin11 said:

One more question which I have not found the answer to. 
I believe, once a person is 66 they stop paying national insurance. What happens to that money? 
Does it go into my pot that I pay tax on? In my case will I pay 40% tax on it?
Therefore my tax payment would go up and not down. 
Or will I pay no tax on that portion of my pay?

How do you work that out?  If you don't pay £100 in National insurance it becomes income which will be taxed at 40% so you're £60 better off per £100 not paid in NI.  How did you come to the conclusion your overall tax burden is higher?

HappyHarry

GrubbyGirl_2 said:

johntin11 said:

One more question which I have not found the answer to. 
I believe, once a person is 66 they stop paying national insurance. What happens to that money? 
Does it go into my pot that I pay tax on? In my case will I pay 40% tax on it?
Therefore my tax payment would go up and not down. 
Or will I pay no tax on that portion of my pay?

How do you work that out?  If you don't pay £100 in National insurance it becomes income which will be taxed at 40% so you're £60 better off per £100 not paid in NI.  How did you come to the conclusion your overall tax burden is higher?

No that’s not correct. The national insurance that was previously paid does not become additional taxable income.

Earned income has income tax and national insurance applied to it separately. Once you reach state pension age, the national insurance is no longer applied. This means that you are better off by 100% of the national insurance that would previously have been applied.