Quizzes & Puzzles6 mins ago
Defer State Pension?
Hello I'll be getting my state pension in August but am considering deferring it as I am still working part time and it will be taxed. Would I be better off taking it and putting it into an ISA or deferring it ? Thank you
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For every 9 weeks you defer, you'll get an extra 1%, which is around an extra £2.20 a week.
If you defer for a full year, you get 5.8% extra, which is £12.83 a week.
On current figures, a one year deferral would net you an extra £667 a year on your state pension, for life. Yet, do note that to get this, you'll have given up £11,500 in state pension that you could have claimed in the first year.
In general, if you defer for any amount of time, you'd need to live for around 20 years after taking your state pension to even out the amounts... which is around the time an average 66 year old is expected to live."
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If you defer for a year you'll gain 5.8% extra pension for every year you live
If you don't, you'll lose around 17% in a year if you are a basic tax payer (20% to the tax man, 3% to you in interest*), more if you are a higher tax payer
*I've estimated the interest at 3% because if you will be saving your pension monthly, not as an £11k lump sum.
dont ask us - ask which !
basically you have to calculate the cross over point ( ahead in years) - that is the year in which it was all worthwhile even tho there as a risk of aloss in earlier years ( and then you have to live to that year)
This is where Barry goes Baaaarp ! and deletes my post. My NHS pension - I took a larger lump sum and smaller pension ( old rules) and and the cross over point, where it became a bad deal was - 20y
I thought it was never worth deferring the state pension - BUT the which article - tells you how to do it
You have given us your pension history, and even as a NHS pensioner the history made my brayne hurt. (( I took my pension 2012 and did diddly squat since then)
Most answers are er flecting the recd wisdom don't it is not worth it
interesting that the cross over oint of 20 ( where it becomes a good idea) is so frequently 20 y -
have our great and good leaders factored in the number of people who reach 60 but dont reach 70? - ( it seems huge - muuch greater than 20%)
“If the state pension is taxable , is tax taken off before it's paid to you if you're not working ?”
No. DWP doesn't have he ability to tax State Pensions (or to pay them calendar monthly instead of four-weekly).
If you have other income which takes you above the personal tax-free allowance of £12,570 in total, HMRC adjust your tax code so that tax due on all your income is collected from your extra income. Without a State Pension (or any other complications) everybody has a tax code of 1257, meaning they can have an income of £12,570 without paying tax. If they have a State Pension, their personal allowance is reduced by the annual value of that pension. So if they have a State Pension of £10,000, their tax free allowance becomes £2,570, and their tax code 257. This means they can only have other income of £2,570 before tax is due.