What do i get

Silvertabby · 22 July at 10:10AM

Break even point for taking post 2016 State pension deferral (assuming you are a basic rate taxpayer) is about 18 years.

Lowtrawler · 22 July at 2:56PM

As the poster says they are a higher rate tax payer, the payback period will depend on whether they become a basic rate tax payer on retirement. If so, the payback period shortens to around 13 years. If they remain a higher rate tax payer, the payback period stays around 18 years.

The simple answer to their question of whether they should continue deferring is to ask how long they expect to live. To be a net beneficiary from the deferral, they will need to live either 13 years or 18 years after they bring the state pension into payment. After 3 years of deferral, that already means they will not get any benefit from the deferral until they are into their 80's. Continuing to defer for another 3 years will push that point into their mid/late eighties.

A better approach might be to claim the state pension and pay the equivalent amount into a personal pension to avoid higher rate tax on surplus income. The growth in the pension could potentially provide a better outcome while also managing the tax position.