Pension Advice

[lankeela]

With the big day looming I wonder what others are doing about their pensions? I shall continue to work but wondering if it is worth deferring the pension? There is also a possibility I can cut my hours at work which would presumably reduce the tax I pay if I do take it - any thoughts? Is there much benefit in deferring or would I be better to take it and cut my hours thus gradually getting used to having less money?

[woofgang]

I didn't defer. The pension goalposts have already been moved massively once and I lost out. I don't trust ANY government not to move the pension goalposts again. If the money is in my account, they can't get it back.

[Prudie]

When I looked into this the figure of 17 years needed to defer before you get back more than you would if you took it from the start kept cropping up. Seems incredible, maybe someone could clarify.

[bhg481]

Take your pension and cut your hours. That way you get used to having more free time on your hands, so you don't go from full-time employment to full-time idleness. It also stops you getting used to the extra income before, when you do retire, you drop to pension only. I dropped to a 3-day week before I retired fully and it was the best decision I made.
Looking on the morbid side, I gave that advice to Mikey about 3 months before he was due to retire. He said he'd think about it but didn't live long enough to reach retirement.

[ubasses]

You do not benefit from deferring a post 2016 pension as much as the pre 2016. However you will an accrue 5.8% per annum to the basic pension for the period you deferred for. (the old one was 10.4%).
Unlike the old scheme you cannot have the money paid as a lump sum with 2% over base rate.
Neither is the deferred portion inheritable as before.
Most advice I have read is that the optimum length of deferment is
4 to 5 years, but I am looking at the old scheme.
I have deferred under the old scheme, just gone through the 4 year mark and am looking at making a decision of a lump sum of £35000 or an extra £67 per week.
Hope that helps to give you an idea and compare your scheme to the old.

[Bazile]

What pension are we talking about - work pension ?

If so doesn't it depend on the type of work pension you have - or am I mistaken ?

[THECORBYLOON]

BHG, not sure if you're saying the deferred portion of State Pension cannot be inherited or no.

If the pension is in payment, that is the figure used to calculate the inherited amount.

[TonyV]

Lot's of different options. From basic government one which always everyone pays into (providing you have valid NHS number) to all sorts of private and company ones.

[bhg481]

TCL - I wasn't considering inheritance of pension; I was simply pointing out that if you defer you might not live long enough to get anything.

[THECORBYLOON]

You said, "Neither is the deferred portion inheritable as before." but it is still.

[ubasses]

That was me Corbyloon.
From Gov website
You can usually inherit your partner’s extra State Pension if all of the following apply:
your partner reached State Pension age before 6 April 2016
you were married to, or in a civil partnership with, your partner when they died
your partner had deferred their State Pension or was claiming their deferred State Pension when they died
you didn’t remarry or form a new civil partnership before you reached State Pension age
If your partner died before 6 April 2010, one of the following must also apply:
you were over State Pension age when your partner died
you were under State Pension age when your partner died, you’re a woman and your deceased partner was your husband
You can only receive any extra State Pension you’ve inherited once you’ve reached State Pension age.

[THECORBYLOON]

The seventeen year period to be in profit is near enough.

Say you are entitled to £10,000 a year but defer it for fifty-two weeks.

You would get an additional 5.77% or £577 a year. However, as you didn't get the £10,000 in that first year, it will take (10,000/577) years to make up that £10,000.

That period is seventeen years and four months.

[THECORBYLOON]

Apologies for confusing the names.

[jennyjoan]

Don't defer - take it asap.

[lankeela]

Thanks all, definitely considering dropping the hours and taking it to make up the shortfall.

[Peter Pedant]

// I don't trust ANY government not to move the pension goalposts again.//
oh dear and pensions is all about - - trust
yes I agree that they will ( not might)
and they cant once you have vested

remember that your pension is taxable so you need to do the tax calculation more carefully - they may not be much in it but there is the time element ( you get more free time)

deferring: the usual calculation is to see the old undeferred amount and the new deferred pension and see how long you have to live before one overtakes the other - usually with deferred pensions it is a long time or never before deferring is a good idea

well done for thinking ahead

[Peter Pedant]

// the figure of 17 years needed //

it was nineteen or twenty one years for my pension ( smaller lump sum) so it is about right

never defer and take larger sum now - ubasses I think you must have been given some pretty crappy advice - if you were advised by a work employee you may find that he wasnt employed for such and so you have no grounds to sue. Happened to me: I was philosophical considering some of the other things that happened to me

[ubasses]

Hello Peter, my decision was made as we are living quite comfortably off 2 defined benefit pensions. There is no way I would get a 10.4% interest rate anywhere. Even the 2% over base rate is better than average for the lump sum. The chart produced by Citizens Advice shows me breaking even in 10 years if I decide to take the extra pension.
Coming up to, what is felt the optimum time to defer, big discussions taking place as to which way we jump