Do I defer or do I not !

stockportsam

I'm due to retire at 65 years of age in Nov 2008 but my employers have asked me to stay on full time. Should I defer my State pension or should I draw it and put it in a savings account in a building society?

I should stay within the lower tax band limit if I draw my State pension as well as earn a salary.

Any ideas ?

Mikeyorks

If you defer (for at least 12 months) ... the deferred sum will attract BofE base rate + 2% .... which is probably better than you will manage elsewhere in a taxable account.

When the lump sum is paid it is taxable however .... but will only be at 20% (according to your OP) as it's not aggregated with your income. But just charged at the rate you are paying. Nor does it count against age related allowances .. which may impact you after 65.

Really down to your arithmetic I think. Or pension in the hand (or ISA) might be better than lump sum ...etc?

Primrose

I'd be tempted to draw your State Pension and put it in a savings account if only because when one reaches the mid-sixties life can get a little uncertain. Although you hope for a long retirement, you could be unexpectedly dead within a year and then all the money you have paid in National Insurance contributions would have been completely wasted and your partner won't have received a penny in benefits either. Grab it while you can, especially if it isn't going to put you into a higher tax bracket. If you put your pension into a CASH ISA you won't be taxed on the interest either. The other issue is "Do you WANT to carry on working after 65?" There comes a point when health issues could start to slow you down and your most productive retirement years could pass very quickly before you've had a chance to enjoy them. Will you later regret perhaps not having taken those healthy years for some fruitful leisure time before you start slowing down? If it comes to striking a balance between income and quality of life, don't always go for the money unless you desperately need it. At 65 it's time to have a little time for oneself. Perhaps when you're receiving your State Pension you could work one day or two days less a week?

stockportsam

Thanks for your help. I've decided to start drawing my State Pension from my 65th birthday and put it into a savings account.

The deferred schemes looks promising but I can't trust the government not to move the goal posts at a later date !

cyclonebri1

stockportsam wrote: »

Thanks for your help. I've decided to start drawing my State Pension from my 65th birthday and put it into a savings account.

The deferred schemes looks promising but I can't trust the government not to move the goal posts at a later date ![/quote]


You'll not go too far wrong if you keep thinking that way;)

As said make sure if you do stay on, it's because you want to. Enjoy your retirement:T

Primrose

Hang on in there until November and then enjoy your retirement. You've worked long and hard for it. You've still got a few months to plan all those enjoyable activities you've always wanted to do but never had time for.