You can, but there’s no benefit in doing, a couple of years back if you deferred your state pension for a year you got something like an additional 8% increase on your pension (and subsequently for every year you deferred), that unfortunately got done away with during the some recent changes. I was actually going to do this and missed out by weeks, I’m now take my state pension (as the only other option was to defer claiming it) and reinvesting it my personal pension as I’m lucky I’m still able to work and at present god willing I will be working on until I’m 70 or 71.
Just a warning about doing this I took financial and tax advice as immediately I reached retirement age, HMRC hit my personal allowance as rightly they said I was receiving unearned income, my tax advisor had to prove that my state pension was being paid into my private pension via my wages, then I received an unrated personal tax allowance, hope that make sense.
You can, but there’s no benefit in doing, a couple of years back if you deferred your state pension for a year you got something like an additional 8% increase on your pension (and subsequently for every year you deferred), that unfortunately got done away with during the some recent changes. I was actually going to do this and missed out by weeks, I’m now take my state pension (as the only other option was to defer claiming it) and reinvesting it my personal pension as I’m lucky I’m still able to work and at present god willing I will be working on until I’m 70 or 71.
Just a warning about doing this I took financial and tax advice as immediately I reached retirement age, HMRC hit my personal allowance as rightly they said I was receiving unearned income, my tax advisor had to prove that my state pension was being paid into my private pension via my wages, then I received an unrated personal tax allowance, hope that make sense.
Not quite sure what you mean by "being paid in to my private pension via my wages" ?
Do you mean via a Limited Company or just that your State pension was being paid as normal & simply added to your income stream, ie....earned & unearned income ??
2nd one golfie, the state pension is paid into my bank account, and the company take the same amount out of my wages and pays it directly into my personal pension.
2nd one golfie, the state pension is paid into my bank account, and the company take the same amount out of my wages and pays it directly into my personal pension.
Can't see what the problem was then. Anyone can fund a pension from whatever means up to £3600 pa gross - anymore is then reliant on the appropriate earned income. Limit is £4k if you have activated a pension of any sorts (lump sum or income) and then the recycling rules apply.....which are too numerous to list here.
The problem was that they immediately took my state pension as unearned income, and taxed it at 40%.
But your State pension counts as earned income and would be taxed at 0%, 20%, 40% or 45% depending on what other income you have. If it's your only income then assuming it would fall below the current £11,600 allowance you wouldn't pay any tax. If you are also earning from other sources then your State pension will be added to that to determine your highest rate of income tax.
Example: You earn £50,000 from employment so you would be paying 40% tax (over £46,351) - you would therefore pay 40% tax on your State pension.
Apologies meant earned income and I’m still at work, earning wages and dividends, oh and to complicate matters more it’s an enhanced state pension, so I get more than the normal state pension which shall we say put me to close to a very high tax threshold, hence the need for so much advice. That’s the problem with trying to simplify answers on here, often there’s more hidden than that can be easily explained.
Apologies meant earned income and I’m still at work, earning wages and dividends, oh and to complicate matters more it’s an enhanced state pension, so I get more than the normal state pension which shall we say put me to close to a very high tax threshold, hence the need for so much advice. That’s the problem with trying to simplify answers on here, often there’s more hidden than that can be easily explained.
Perhaps an example of where deferring State pension makes sense.
I will almost certainly defer my State pension for that very reason - and I'm over that 'very high tax' threshold!
I believe that the State Pension is paid gross in all cases & then you pay any tax via SA. I have a few clients still working & claiming their State Pension and fund private pensions without any bother.
HMRC will only have issues if you are accessing money from any other pension schemes & then "recycling" this money into a pension, even if you have earned income too.
@Charltonkerry was right to seek advice but shouldn't have thought it would have caused too many problems.
I believe that the State Pension is paid gross in all cases & then you pay any tax via SA. I have a few clients still working & claiming their State Pension and fund private pensions without any bother.
HMRC will only have issues if you are accessing money from any other pension schemes & then "recycling" this money into a pension, even if you have earned income too.
@Charltonkerry was right to seek advice but shouldn't have thought it would have caused too many problems.
Yes that is the case - the same as taxable interest income is now paid gross and declared on SA.
No it didn’t, the only trouble was trying to explain it on here, without giving to much away. Before you defer your pension (I know you will) check, it was only an option for me basically if I didn’t mind losing all the pension I deferred. As I said there’s been a recent change in the pension law we’re previously your could defer and receive an increase pension at a later stage, this was removed from my age group just before I came to that age, if I still had the option then that is what I would have done, in fact that was the initial thoughts of both my financial and tax advisor.
No it didn’t, the only trouble was trying to explain it on here, without giving to much away. Before you defer your pension (I know you will) check, it was only an option for me basically if I didn’t mind losing all the pension I deferred. As I said there’s been a recent change in the pension law we’re previously your could defer and receive an increase pension at a later stage, this was removed from my age group just before I came to that age, if I still had the option then that is what I would have done, in fact that was the initial thoughts of both my financial and tax advisor.
You still can defer - but the percentage increase is half what it used to be.
Apologies meant earned income and I’m still at work, earning wages and dividends, oh and to complicate matters more it’s an enhanced state pension, so I get more than the normal state pension which shall we say put me to close to a very high tax threshold, hence the need for so much advice. That’s the problem with trying to simplify answers on here, often there’s more hidden than that can be easily explained.
Perhaps an example of where deferring State pension makes sense.
I will almost certainly defer my State pension for that very reason - and I'm over that 'very high tax' threshold!
..which is why i raised the point another example of why individuals need advice that suits them ..you should make a killing on here golfie
EDIT: If you reached state retirement age before 5 April 2016 you could take the deferred chunk as a lump sum.
However I don't believe lump sum is an option anymore for those reaching state retirement age after 5 April 2016. You just get a bit extra each week if you defer at roughly half the rate of pre 5 April 2016 people who elect to have higher weekly payments rather than the lump sum.
It's all very well politicians proposing to raise state pension age in stages in future. They are well paid, with generous secure pensions - and are able to work well into old age if they have the health to do so.
But it's hardly manual work. How do people cope with advancing state pension dates if they're having to do physically demanding or heavy work? Most people would struggle to get through a physical hard day's work at 60, let alone nearer 70.
I know people will trot out the regular soundbites that, "people are living longer, the state pension is not sustainable", "the nation can no longer afford to pay out pensions for 20 years or more ...... and of course, it does have to be paid for and somebody has to pay, etc.
But nevertheless, not every person in their 60s has a desk job, or works in a sweet shop. And it's an age where strength declines, and quite often, personal health too.
On CL, are there builders, landscape gardeners and heavy manual workers still able to work 8 hours a day, 5 or 6 days a week well into their 60s?
Assumes you keep doing the same job all your life!
Most of today' teenagers will probably have to do half a dozen jobs throughout their lives as their roles become unviable because of AI or whatever.
If they do happen to be doing manual work at age 60, they will simply be expected to change and something different (probably a 'caring' role') for the next twenty years. Unfortunately there is real reason why any healthy person should abandon work altogether until they reach their eighties?
That's all very well if you're still reasonably young and have choices.
But when you're already around 60, life and wear & tear is taking its toll, then any chance of choice of alternative 'easier' work is much harder to come by. Many people of that age don't have experience in alternative work. If you live in a city or large urban area, maybe they'll be some opportunities, but others are not so lucky.
Like it or not, many many employers are ageist in their recruitment policies. New employment is often for low paid, menial work or part time ...... or even the love child of the Tory Party, zero-hours contracts where you frequently don't get paid at all.
How do you survive financially?
Completely take your point! I would never want to take away peoples' pensions when there is no reasonable alternative.
I just feel that the government and society should be doing all it can to avoid 'early' retirement and create policies which at least encourage everyone to work (if they want to!) in the same way that young people and single parents etc. are encouraged.
At the moment everything seems geared to the idea that you work for around 40 years to get everything (such as mortgage) in order. Then you're supposed to sit around doing nothing for another 35 years getting angrier and angrier and worrying about who will look after you if you really do get old.
This just isn't a sustainable way for a society to organise itself!
Speak for yourself. When I reach 61 I would have been working for 45 years. I think thats long enough. I (hopefully) will have paid off my mortgage & have enough in my pension pot to sustain me until I get the State Pension at age 67.
I wont be old & bitter, or sit around all day getting angry. Just don't want to have think about clients, compliance, regulations, getting stuck in traffic etc etc.
Who would you recommend contacting regarding a private pension pot?
I'm 37, paid into a work pension as long as I've been allowed to. Just been bent over massively. Looking at least another 30 years until I need to make those decisions. Oggy is right, these decisions are made by people who aren't affected by them. I'll be drawing out the maximum amount I possibly can immediately, seen too many colleagues die immediately after retiring to do anything else
I'm 37, paid into a work pension as long as I've been allowed to. Just been bent over massively. Looking at least another 30 years until I need to make those decisions. Oggy is right, these decisions are made by people who aren't affected by them. I'll be drawing out the maximum amount I possibly can immediately, seen too many colleagues die immediately after retiring to do anything else
Currently you can access your pension at age 55............which when brought in by Gordon Brown in 2006 was 10 years from the then SPA of 65.
As the SPA has now increased to 67 or 68 to those retiring post 2020 and expected to be age 70 for any milenials, it is widely expected that the min age that you can acess your pension pot will also increase to keep in line with the 10 year rule. Nothing official yet but it is coming......
It's all very well politicians proposing to raise state pension age in stages in future. They are well paid, with generous secure pensions - and are able to work well into old age if they have the health to do so.
But it's hardly manual work. How do people cope with advancing state pension dates if they're having to do physically demanding or heavy work? Most people would struggle to get through a physical hard day's work at 60, let alone nearer 70.
I know people will trot out the regular soundbites that, "people are living longer, the state pension is not sustainable", "the nation can no longer afford to pay out pensions for 20 years or more ...... and of course, it does have to be paid for and somebody has to pay, etc.
But nevertheless, not every person in their 60s has a desk job, or works in a sweet shop. And it's an age where strength declines, and quite often, personal health too.
On CL, are there builders, landscape gardeners and heavy manual workers still able to work 8 hours a day, 5 or 6 days a week well into their 60s?
Assumes you keep doing the same job all your life!
Most of today' teenagers will probably have to do half a dozen jobs throughout their lives as their roles become unviable because of AI or whatever.
If they do happen to be doing manual work at age 60, they will simply be expected to change and something different (probably a 'caring' role') for the next twenty years. Unfortunately there is real reason why any healthy person should abandon work altogether until they reach their eighties?
That's all very well if you're still reasonably young and have choices.
But when you're already around 60, life and wear & tear is taking its toll, then any chance of choice of alternative 'easier' work is much harder to come by. Many people of that age don't have experience in alternative work. If you live in a city or large urban area, maybe they'll be some opportunities, but others are not so lucky.
Like it or not, many many employers are ageist in their recruitment policies. New employment is often for low paid, menial work or part time ...... or even the love child of the Tory Party, zero-hours contracts where you frequently don't get paid at all.
How do you survive financially?
Completely take your point! I would never want to take away peoples' pensions when there is no reasonable alternative.
I just feel that the government and society should be doing all it can to avoid 'early' retirement and create policies which at least encourage everyone to work (if they want to!) in the same way that young people and single parents etc. are encouraged.
At the moment everything seems geared to the idea that you work for around 40 years to get everything (such as mortgage) in order. Then you're supposed to sit around doing nothing for another 35 years getting angrier and angrier and worrying about who will look after you if you really do get old.
This just isn't a sustainable way for a society to organise itself!
Speak for yourself. When I reach 61 I would have been working for 45 years. I think thats long enough. I (hopefully) will have paid off my mortgage & have enough in my pension pot to sustain me until I get the State Pension at age 67.
I wont be old & bitter, or sit around all day getting angry. Just don't want to have think about clients, compliance, regulations, getting stuck in traffic etc etc.
Who would you recommend contacting regarding a private pension pot?
It's all very well politicians proposing to raise state pension age in stages in future. They are well paid, with generous secure pensions - and are able to work well into old age if they have the health to do so.
But it's hardly manual work. How do people cope with advancing state pension dates if they're having to do physically demanding or heavy work? Most people would struggle to get through a physical hard day's work at 60, let alone nearer 70.
I know people will trot out the regular soundbites that, "people are living longer, the state pension is not sustainable", "the nation can no longer afford to pay out pensions for 20 years or more ...... and of course, it does have to be paid for and somebody has to pay, etc.
But nevertheless, not every person in their 60s has a desk job, or works in a sweet shop. And it's an age where strength declines, and quite often, personal health too.
On CL, are there builders, landscape gardeners and heavy manual workers still able to work 8 hours a day, 5 or 6 days a week well into their 60s?
Assumes you keep doing the same job all your life!
Most of today' teenagers will probably have to do half a dozen jobs throughout their lives as their roles become unviable because of AI or whatever.
If they do happen to be doing manual work at age 60, they will simply be expected to change and something different (probably a 'caring' role') for the next twenty years. Unfortunately there is real reason why any healthy person should abandon work altogether until they reach their eighties?
That's all very well if you're still reasonably young and have choices.
But when you're already around 60, life and wear & tear is taking its toll, then any chance of choice of alternative 'easier' work is much harder to come by. Many people of that age don't have experience in alternative work. If you live in a city or large urban area, maybe they'll be some opportunities, but others are not so lucky.
Like it or not, many many employers are ageist in their recruitment policies. New employment is often for low paid, menial work or part time ...... or even the love child of the Tory Party, zero-hours contracts where you frequently don't get paid at all.
How do you survive financially?
Completely take your point! I would never want to take away peoples' pensions when there is no reasonable alternative.
I just feel that the government and society should be doing all it can to avoid 'early' retirement and create policies which at least encourage everyone to work (if they want to!) in the same way that young people and single parents etc. are encouraged.
At the moment everything seems geared to the idea that you work for around 40 years to get everything (such as mortgage) in order. Then you're supposed to sit around doing nothing for another 35 years getting angrier and angrier and worrying about who will look after you if you really do get old.
This just isn't a sustainable way for a society to organise itself!
Speak for yourself. When I reach 61 I would have been working for 45 years. I think thats long enough. I (hopefully) will have paid off my mortgage & have enough in my pension pot to sustain me until I get the State Pension at age 67.
I wont be old & bitter, or sit around all day getting angry. Just don't want to have think about clients, compliance, regulations, getting stuck in traffic etc etc.
Who would you recommend contacting regarding a private pension pot?
Pension wise if you want free impartial advice.
And you think that an IFA wont give you that ??
Wait. You're saying IFA's work for free now. Book me in with you then Golfie.
It's all very well politicians proposing to raise state pension age in stages in future. They are well paid, with generous secure pensions - and are able to work well into old age if they have the health to do so.
But it's hardly manual work. How do people cope with advancing state pension dates if they're having to do physically demanding or heavy work? Most people would struggle to get through a physical hard day's work at 60, let alone nearer 70.
I know people will trot out the regular soundbites that, "people are living longer, the state pension is not sustainable", "the nation can no longer afford to pay out pensions for 20 years or more ...... and of course, it does have to be paid for and somebody has to pay, etc.
But nevertheless, not every person in their 60s has a desk job, or works in a sweet shop. And it's an age where strength declines, and quite often, personal health too.
On CL, are there builders, landscape gardeners and heavy manual workers still able to work 8 hours a day, 5 or 6 days a week well into their 60s?
Assumes you keep doing the same job all your life!
Most of today' teenagers will probably have to do half a dozen jobs throughout their lives as their roles become unviable because of AI or whatever.
If they do happen to be doing manual work at age 60, they will simply be expected to change and something different (probably a 'caring' role') for the next twenty years. Unfortunately there is real reason why any healthy person should abandon work altogether until they reach their eighties?
That's all very well if you're still reasonably young and have choices.
But when you're already around 60, life and wear & tear is taking its toll, then any chance of choice of alternative 'easier' work is much harder to come by. Many people of that age don't have experience in alternative work. If you live in a city or large urban area, maybe they'll be some opportunities, but others are not so lucky.
Like it or not, many many employers are ageist in their recruitment policies. New employment is often for low paid, menial work or part time ...... or even the love child of the Tory Party, zero-hours contracts where you frequently don't get paid at all.
How do you survive financially?
Completely take your point! I would never want to take away peoples' pensions when there is no reasonable alternative.
I just feel that the government and society should be doing all it can to avoid 'early' retirement and create policies which at least encourage everyone to work (if they want to!) in the same way that young people and single parents etc. are encouraged.
At the moment everything seems geared to the idea that you work for around 40 years to get everything (such as mortgage) in order. Then you're supposed to sit around doing nothing for another 35 years getting angrier and angrier and worrying about who will look after you if you really do get old.
This just isn't a sustainable way for a society to organise itself!
Speak for yourself. When I reach 61 I would have been working for 45 years. I think thats long enough. I (hopefully) will have paid off my mortgage & have enough in my pension pot to sustain me until I get the State Pension at age 67.
I wont be old & bitter, or sit around all day getting angry. Just don't want to have think about clients, compliance, regulations, getting stuck in traffic etc etc.
Who would you recommend contacting regarding a private pension pot?
Pension wise if you want free impartial advice.
And you think that an IFA wont give you that ??
Wait. You're saying IFA's work for free now. Book me in with you then Golfie.
Some more stuff. First Not all IFAs (no apostrophe required) are equal. Pension advice is complex make sure the IFA you choose has the expertise you need. Second You can use £1,500 from your pension tax-free to pay for your advice. https://gov.uk/government/news/savers-to-be-able-to-access-1500-tax-free-for-pension-advice Third You can get (some) free advice from the Government's Pension Wise set-up if you are over 50. https://pensionwise.gov.uk/en Finally Don't take any notice of anything @Carter has said unless you want to spend twenty odd years as a pauper.
Impartial, yes. Free? Well it'd be nice if they did, but I'd assume they need to make a living like everyone else :-)
There are some (ahem) who offer a free initial meeting........
And when you get to Golfie's office for the appointment, you'll spend the whole time arguing about Charlton, Roland the Rat, the Aussies and why we haven't signed anybody.
Comments
Just a warning about doing this I took financial and tax advice as immediately I reached retirement age, HMRC hit my personal allowance as rightly they said I was receiving unearned income, my tax advisor had to prove that my state pension was being paid into my private pension via my wages, then I received an unrated personal tax allowance, hope that make sense.
Do you mean via a Limited Company or just that your State pension was being paid as normal & simply added to your income stream, ie....earned & unearned income ??
Example: You earn £50,000 from employment so you would be paying 40% tax (over £46,351) - you would therefore pay 40% tax on your State pension.
I will almost certainly defer my State pension for that very reason - and I'm over that 'very high tax' threshold!
HMRC will only have issues if you are accessing money from any other pension schemes & then "recycling" this money into a pension, even if you have earned income too.
@Charltonkerry was right to seek advice but shouldn't have thought it would have caused too many problems.
https://www.gov.uk/deferring-state-pension/what-you-get
EDIT: If you reached state retirement age before 5 April 2016 you could take the deferred chunk as a lump sum.
However I don't believe lump sum is an option anymore for those reaching state retirement age after 5 April 2016. You just get a bit extra each week if you defer at roughly half the rate of pre 5 April 2016 people who elect to have higher weekly payments rather than the lump sum.
This is why we need IFA’s
As the SPA has now increased to 67 or 68 to those retiring post 2020 and expected to be age 70 for any milenials, it is widely expected that the min age that you can acess your pension pot will also increase to keep in line with the 10 year rule. Nothing official yet but it is coming......
Book me in with you then Golfie.
First Not all IFAs (no apostrophe required) are equal. Pension advice is complex make sure the IFA you choose has the expertise you need.
Second You can use £1,500 from your pension tax-free to pay for your advice. https://gov.uk/government/news/savers-to-be-able-to-access-1500-tax-free-for-pension-advice
Third You can get (some) free advice from the Government's Pension Wise set-up if you are over 50. https://pensionwise.gov.uk/en
Finally Don't take any notice of anything @Carter has said unless you want to spend twenty odd years as a pauper.
But you won't be charged the first time.