Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • Syranara
    • By Syranara 4th Jan 18, 8:44 AM
    • 7Posts
    • 0Thanks
    Syranara
    Should I defer pension?
    • #1
    • 4th Jan 18, 8:44 AM
    Should I defer pension? 4th Jan 18 at 8:44 AM
    Morning everyone,

    I am due to receive both my State Pension and a small private pension later on in this year but I still have another 6 years to pay off my mortgage. My husband is already retired (State Pension only) so it falls on my wages to pay everything. I believe I must come to a decision about 4 months before pension is due so I’m already panicking over what I need to do as I don't want to get it wrong.

    I realise that in all probability I will have to continue working to pay this mortgage but should I defer my State Pension and if so, by how many years (the whole 6 years?) and what do I do about the private pension as, although small, it will be due and I don’t believe I can defer it! I am also concerned that I had a major operation last year and there is also the fear that if anything goes wrong and I am ill that the mortgage will not get paid.

    Help please as I do not have a clue what to do and it is all down to me to get this right! My husband retired about 6 months after receiving his State Pension as he said it was all being snatched back in tax (his tax code dropped to about 164 if I am remembering correctly).

    Thank you.
Page 1
    • pip895
    • By pip895 4th Jan 18, 9:43 AM
    • 577 Posts
    • 321 Thanks
    pip895
    • #2
    • 4th Jan 18, 9:43 AM
    • #2
    • 4th Jan 18, 9:43 AM
    Will you or could you get a lump sum from the PP to help pay off that mortgage?

    Could your OH not get a part time job?
    • Syranara
    • By Syranara 4th Jan 18, 9:54 AM
    • 7 Posts
    • 0 Thanks
    Syranara
    • #3
    • 4th Jan 18, 9:54 AM
    • #3
    • 4th Jan 18, 9:54 AM
    Hi pip895 thanks for your quick reply. There is not enough in the PP to pay off the mortgage and my OH has a hip problem and cannot work. So it's down to me but not sure what to do for the best.
    • IanSt
    • By IanSt 4th Jan 18, 10:01 AM
    • 260 Posts
    • 194 Thanks
    IanSt
    • #4
    • 4th Jan 18, 10:01 AM
    • #4
    • 4th Jan 18, 10:01 AM
    I think people are going to need a lot more information then you've provided to come up with some opinions on your best course of action.

    Details needed would include how much this mortgage is, what other savings do you have, how much is this other pension likely to pay out, what is it worth, how much will/do the state pensions bring in, etc.

    If it were me then I'd be making a detailed budget of what money there is, what incomes/pensions there are and what expenditures I expect over the coming years. I'd also be thinking of whether I really wanted to continue working and whether there were options to work part-time. Plus I'd be making 100% sure whether this other pension could be deferred or not.

    Once those questions were answered then it would hopefully be a lot clearer on whether retirement still beckoned or whether I had to retire x years later than this year.
    • Syranara
    • By Syranara 4th Jan 18, 10:18 AM
    • 7 Posts
    • 0 Thanks
    Syranara
    • #5
    • 4th Jan 18, 10:18 AM
    • #5
    • 4th Jan 18, 10:18 AM
    IanSt thanks for your comments. Here is the information you suggest.

    Mortgage outstanding is £60,000.
    Savings are £20,000
    OH pension £8,853.84 pa
    My PP £3,500 pa starting from 1 Dec 2018
    My State Pension estimated at £8,325.09

    Expenditure at present pa which includes mortgage payment and grandchildren birthdays/Xmas (14 grandchildren) is £26,251.80

    No option for me to work part time in present employment. Income at present £31,321.92 job stressful and if I could get a less intense job near to home then I would go for it but do not think I can afford it!

    Comments appreciated as I!!!8217;m going round in circles.
    • Syranara
    • By Syranara 4th Jan 18, 10:22 AM
    • 7 Posts
    • 0 Thanks
    Syranara
    • #6
    • 4th Jan 18, 10:22 AM
    • #6
    • 4th Jan 18, 10:22 AM
    Oh and I have no option of downsizing as we are living in a "first time buyer" type property due to returning to UK after living abroad for 2 years.
    • kidmugsy
    • By kidmugsy 4th Jan 18, 10:46 AM
    • 10,842 Posts
    • 7,419 Thanks
    kidmugsy
    • #7
    • 4th Jan 18, 10:46 AM
    • #7
    • 4th Jan 18, 10:46 AM
    By "private pension" do you mean an occupational pension of the Defined Benefit type e.g. a final salary pension?
    Free the dunston one next time too.
    • Syranara
    • By Syranara 4th Jan 18, 10:48 AM
    • 7 Posts
    • 0 Thanks
    Syranara
    • #8
    • 4th Jan 18, 10:48 AM
    • #8
    • 4th Jan 18, 10:48 AM
    Hi Kidmugsy it is a pension where employer has contributed a percentage each month alongside with my own contribution (only been in existence for a few years). No final salary pension.
    • Mnd
    • By Mnd 4th Jan 18, 10:54 AM
    • 545 Posts
    • 644 Thanks
    Mnd
    • #9
    • 4th Jan 18, 10:54 AM
    • #9
    • 4th Jan 18, 10:54 AM
    A very quick look would suggest as you indicate that you can't afford to stop working.
    I would certainly wait as long as possible to take your pensions as you will be paying tax on anything you take with the exception of your tax free lump sum

    I am a bit surprised that you feel you need to decide immediately about the state pension, I just think you don't claim it until you want to.I may be wrong and I obviously don't know about your private pension.perhaps if you have to take it but would prefer not to you could consider transferring.

    Also, do you claim the married couples tax allowance, as your husband is a non tax payer you could transfer some of his tax allowance to you and gain about 200 per year ( you can bacdate6this I think)

    And start letting grandchildren know that nanny can't be quite so generous! That's probably just me being tight though. .good luck
    • Mnd
    • By Mnd 4th Jan 18, 10:58 AM
    • 545 Posts
    • 644 Thanks
    Mnd
    And start a pension for yourself and your husband
    He will make £600 a year on tax, if you pay in 2880
    And you could make more..because you can build up taxable money, but take it out whilst deferring and then it becomes tax free!
    • Mnd
    • By Mnd 4th Jan 18, 11:04 AM
    • 545 Posts
    • 644 Thanks
    Mnd
    Can I raise 1 query, if your "personal pension" where you and your employer pay in, but it's only been running a few years....are you sure that is is going to pay 3500 a year? This strikes me as very high
    Hope I'm wrong
    • Alice Holt
    • By Alice Holt 4th Jan 18, 11:07 AM
    • 2,140 Posts
    • 2,491 Thanks
    Alice Holt
    Quick thoughts.
    1) Your (post pension) income will be just above £43k p.a - that doesn't take you into the 40% tax band.
    3) The advantages of deferring the NSP is less than the old SP. For a year not taken,It increases by c.5.8%. I think the breakeven point is around 19 years or so.
    4) So, I wouldn't defer (as you don't hit the 40% tax rate), I would use the additional pension income of c.£12k to reduce the mortgage, and aim to clear it in 4-5 years.

    Or you may wish to make pension contributions as -
    1) Your after retirement income of £20.7k is less than your current expenditure (but what will it be post retirement, and with no mortgage?)
    2) You both may be non-taxpayers in retirement - so this could be tax efficient.

    Is there no intellectual (rather than physical) part-time work your OH could do?

    From your figures, I don't understand why "My husband retired about 6 months after receiving his State Pension as he said it was all being snatched back in tax...". If it took him into the 40% rate then he would have been advised to consider making pension contributions to get 40% tax back that way.
    Does he not have any occupational pensions? A state pension of £8.8k will not provide an individual with a retirement free from financial struggles.

    Edit: Good point from Mnd re the married tax allowance
    Last edited by Alice Holt; 04-01-2018 at 11:10 AM.
    • colsten
    • By colsten 4th Jan 18, 11:14 AM
    • 9,026 Posts
    • 7,792 Thanks
    colsten


    I am also concerned that I had a major operation last year and there is also the fear that if anything goes wrong and I am ill that the mortgage will not get paid.
    Originally posted by Syranara
    can you get/afford a critical illness insurance?

    My husband retired about 6 months after receiving his State Pension as he said it was all being snatched back in tax (his tax code dropped to about 164 if I am remembering correctly).

    OH pension £8,853.84 pa
    Originally posted by Syranara
    Originally posted by Syranara
    Your husband has a personal allowance of £11,500 and therefore should be paying nil income tax if his only income is his state pension. If his tax code says otherwise, he needs to get the tax code corrected (though his SP will be paid without any tax deduction, I believe).

    Do nothing if you want to defer. Your pension will automatically be deferred until you claim it.
    So no need to panic. But good comments from Alice Holt as to whether you should or should not defer. More on https://www.gov.uk/deferring-state-pension
    • Syranara
    • By Syranara 4th Jan 18, 11:31 AM
    • 7 Posts
    • 0 Thanks
    Syranara
    Ok re critical illness insurance - not applicable now as the policy I had was not renewable now "at my age" and would have only covered payments for one year.

    Married tax allowance - sorry I didn't think I could get that. I will look into it.

    Thanks all, I'm digesting the information you have given me!
    • Rodger do good
    • By Rodger do good 4th Jan 18, 11:41 AM
    • 6 Posts
    • 3 Thanks
    Rodger do good
    Hi Syranara
    having read your notes i would certainly advise a road i have gone down many times myself, go to Moneymagpie.com tell your problem to Jasmine
    who is a financial expert like martin Lewis she will get you expert advice and you should get a reply very quickly she has always done this to letters i have sent, please let me and others know if you get any joy,good Luck Kieran
    • AlanP
    • By AlanP 4th Jan 18, 12:04 PM
    • 1,204 Posts
    • 866 Thanks
    AlanP
    If your employer pension is not a Defined Benefit / Final Salary pension but is a Defined Contibution "pot of money" type I would be suprised if it paid £3500 per year and I would be suprised if you HAVE to take it at a set age.

    If it is a DC pension what is the pot value, that is more important than any estimate of what it might provide as a yearly income?
    • Syranara
    • By Syranara 4th Jan 18, 1:16 PM
    • 7 Posts
    • 0 Thanks
    Syranara
    First of all thank you all regarding the married allowance. I didn't know I could get that but having searched on GOV site I have now got my OH to submit the application and I should get this backdated too! Thank you again.

    Still going through my files on my employer pension.
    • Mnd
    • By Mnd 4th Jan 18, 1:27 PM
    • 545 Posts
    • 644 Thanks
    Mnd
    Good. Well done.
    • xylophone
    • By xylophone 4th Jan 18, 2:31 PM
    • 25,566 Posts
    • 15,099 Thanks
    xylophone
    Is your husband certain that he has no private pension at all?

    You mention his hip problem - does he have any care needs?

    Attendance Allowance is not means tested.

    https://www.gov.uk/attendance-allowance
    • drumtochty
    • By drumtochty 8th Jan 18, 12:08 AM
    • 104 Posts
    • 51 Thanks
    drumtochty
    Attendance allowance is not given away, it requires there to be a necessity that the person needs help every day.

    In my experience if it is a simple hip problem and no extreme over egging the pudding is done on the claim form then the claim will be rejected.

    Over egging is fraud.

    I accept that there are a large number of over eggers around but truthful people like the original poster would probably not sleep at night if she did this.

    In saying that it is worth checking out if a doctor will give a report that the husband needs daily help every day.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

4,214Posts Today

6,995Users online

Martin's Twitter