Deferring the state pension

TH1878

I believe there have been actuarial studies that suggest that it's actually detrimental to defer taking your state pension.

TH1878

DD5 wrote: »

I can't claim my pension until 67, so won't be deferring it!! But if were a 60 year old female who had an enjoyable job that paid enough to get by on and who wanted to carry on working, I think I'd defer my pension until 65, which is the age that many women will soon have to work to. It'd make a huge difference to the pension income of some women, especially those who haven't qualified for the full state pension.

I'm in the same situation as you except I have to wait until 68 . However, a lot of women who don't qualify for the full state pension will do so from 6th April 2010 as the rules change. You will only need 30 years of suitable NI contributions, and women will be able to claim up to 20 years for when they were looking after children (with caveats).

EdInvestor

curryous wrote: »

[FONT=&quot]Also, even if I snuff it, the residue in the pot will be paid out to my good wife so all is not lost. I have one whinge, however, about the provision: this residue, while slowly dripping its extra pension increments, does not seem to gain interest while being in the state’s coffers. Surely this is unfair business practice, especially if interest rates increase to their earlier heights?[/FONT]

There is no residue in a pot.Your state pension is paid out of the NI contributions made by younger workers, just as your own NI payments pay for your parents' state pensions.This is known as a Pay As You Go system, and applies to most Government pension in most countries. So your point about interest is irrelevant.

curryous

I take your point, Edinvestor, but to make my point about interest relevant, perhaps I should take what is rightfully mine, ie five years of unpaid pension, as a lump sum and from it, top up the lower pension with an equivalent amount to the Extra Pension. In this way I am playing banker, not the State, and the reducing balance will be subject to interest via reinvestment. Yes, it won't last for ever like the State option but by the time I'm eighty in ten years time, I would expect to be living more frugally anyway.

inquisiteve

I need confirmation of what I have been told by the Pension Advisory Service because it seems to be too good to be true: I am retiring from work at Christmas without an occupational pension and wish to claim my State pension from then, after deferring for over 4 years. I have been told that I can take the normal pension from Christmas but defer the lump sum until the next tax year i.e. April 2010. It means, because my income will be less than the higher personal allowance for 65 year old ladies like me, it will not be subject to tax. This will save me around £8K! Surely there's a catch somewhere or there is such a thing as a free lunch.

millie

inquisiteve wrote: »

I need confirmation of what I have been told by the Pension Advisory Service because it seems to be too good to be true: I am retiring from work at Christmas without an occupational pension and wish to claim my State pension from then, after deferring for over 4 years. I have been told that I can take the normal pension from Christmas but defer the lump sum until the next tax year i.e. April 2010. It means, because my income will be less than the higher personal allowance for 65 year old ladies like me, it will not be subject to tax. This will save me around £8K! Surely there's a catch somewhere or there is such a thing as a free lunch.

Yes that is true and that is the main reason I have deferred mine for the last 3 years. I would have been paying tax. I have now put a claim in to start my pension from February 2010 and the lump sum will not be taxable because my other income this year will be under the tax threshold, quite a considerable saving.

inquisiteve

Thanks for that, Millie, -- I'm so relieved. The one area I still need to clear up is whether I have to delay the pension as well as the lump sum until April; the pensions advisor indicated that it could be paid from Christmas whilst leaving the lump sum until the new tax year and I will need some income to pay the bills until then.