I only found out it was possible when told by a friend last week. Apparently it works out at an increase of almost 6% for every 52weeks, although I don’t know if that can vary up or down. Obviously that includes any increase that you would normally get if you didn’t defer.
That might work for me. Due my pension, aged 66, in July. No current earnings, drawing down the max single persons allowance each year from my remaining private pension, less a small amount for ( decreasing) BS interest. Paying no tax. If I defer my pension I can continue drawing down almost the max tax free allowance until it’s all gone in a few years.
I’m spending hardly any money at the moment..normally I’d be returning next week after 12 weeks in Spain. The 3 walking holidays with friends, up to the end of June, are all cancelled with no likelihood of returning overseas anytime soon.
It would be a bitch if I croaked before getting some state pension though.
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Crudely speaking you'd need to live for another 16.7 years for every year you deferred your state pension. You'd definitely be better off taking it at the earliest opportunity and sticking the money in an ISA or something if you don't need it immediately.
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>>Crudely speaking you'd need to live for another 16.7 years for every year you deferred
I think the b/e time doesn't move much at all whether you defer for one year or two, assuming the starting pension goes up by 6% plus inflation, not literally just 6%.
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It has to be deferred for at least 9 weeks and you get an extra 1% for every 9 weeks it is deferred.
My state pension becomes payable in Nov. So I'm planning to defer it till the new tax year so I can draw down a fairly chunky lump from my pension without too much tax.
Last edited by: smokie on Sun 4 Apr 21 at 10:28
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Technically you don't have to derfer your State Pension: It is automatically deferred until you actually claim it. It isn't paid automaticaly at your retirement age.
In your positions LL deferral seems a good plan. If you are planning to live solely on the State Pension you will ned every penny you can get. Good Luck!
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Hmmm my instinctual thought may have been the opposite CG, for LL's case. If there isn't so much to draw down, take the pension (which will likely be tax free anyway) and keep the modest fund intact for when I need it.
Presumably you've not already soaked up all your 25% tax free bit pf your pension LL?
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Good Lord smokie....I drew down my 25% tax free lump sum at the earliest opportunity. The day I hit 55. Blew it on my 330 convertible and two extended adventure holidays...no regrets whatsoever. Lots of fabulous memories remain in the ol grey matter.
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>> Technically you don't have to derfer your State Pension: It is automatically deferred until you
>> actually claim it. It isn't paid automaticaly at your retirement age.
Mine was. I got a letter to say it was coming and where would I like it paid.
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>> >> Technically you don't have to derfer your State Pension: It is automatically deferred until
>> you
>> >> actually claim it. It isn't paid automaticaly at your retirement age.
>>
>> Mine was. I got a letter to say it was coming and where would I
>> like it paid.
>>
Well they must have made you a special case then. Everybody else has to claim it
From the HMG website.
"You do not get your State Pension automatically - you have to claim it. You should get a letter no later than 2 months before you reach State Pension age, telling you what to do.
You can either claim your State Pension or delay (defer) claiming it.
If you want to defer, you do not have to do anything. Your pension will automatically be deferred until you claim it.
Deferring your State Pension could increase the payments you get when you decide to claim it. Any extra payments you get from deferring could be taxed."
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I’ve applied for my State Pension. £726.28 every 4 weeks (£9450pa) which is more than anticipated.
2021/22 Single Persons Tax free allowance is £12,570...so in the new tax year I could draw down a pro rata amount to maximise my tax free allowance, taking account of State Pension from late July, which reduces to max tax free drawdown of £3100 tax year 22/23, assuming no changes to allowances, less any taxable BS savings interest accruing.
Quite simple sums really
At some point I’ll downsize to a much smaller gaff and release a shed load of capital to fritter away on travelling most of the year. That, at least, is plan A.
Currently no plan B.
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Like all issues re retirement - State Pension, Company Pension, savings - taking a lump sum that is tax free or take a bigger pension and forgo the tax free cash etc
The BIG issue is that you do not know how long you will live, what inflation is going to be, what the UK economy and therefore the State Pension will be etc etc
My parents retired in the early 70s - financially OK - inflation at 20% was a killer as was the fact that my mother lived to 90 plus
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I like the word ‘live’.
As in living life to the full whilst ones’ physical health and mental faculties allow. Not budgeting for the best rubber sheets in the nursing home.
I’m both fortunate, and unfortunate, to (currently) be single. Several married friends of mine, retired in the past few years, are, sadly, in relationships where the other half has a diametrically opposed view as to how their retirement should be spent. Not all. But some.
The word ‘live’ seems to have escaped their lives.
At least it’s not raining.
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My ole woman could have drawn her state pension almost 7 years ago so has built up quite a few Shekels.
She has also been furloughed for the last 12 months thank you, Mr. Rishi.
She will probably throw in the towel when the furlough scheme ends, and get her hands on the spondulics next April.
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My friend’s folks retired at 65.
Dad died 6 months later after a rapid cancer growth
Mum died 1 year after that.
There was nothing left for the family as the “advice” he had received didn’t include anything about guaranteed periods etc even though both had been lifelong smokers.
Reckon about £500000 pension fund just went straight into Standard Life‘a own coffers.
Ironically, their dream had always been to go on the Orient Express but couldn’t afford it. Their estate had £15k cash in a current account.
My wife, a nurse in a hospice, regularly cares for people younger than her (she is 53)
We certainly won’t be delaying taking any pension money when the time comes. I like LL’s outlook on things and interested to see that one person can live very comfortably on income of around a grand a month.
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If at death, you have had to pay for your care, or any proportion of your estate is going to HMG in taxes, you have failed in your duty of life!
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Best time to die is when your creditors are about to take you to court.
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I'm sure I'll have said this before but it's worth repeating.
A good friend managed to get himself made redundant by one of the big banks at 48, despite an excellent pension scheme, for the very good reason that he couldn't stand it any longer and they just piled too much work on him. He got a less stressful, 9 to 5 job and at 53 he announced to me that he was retiring. I knew he had some decent savings but IIRC his pension at that point was only £16,000 a year. I couldn't believe that a relatively young, fit man didn't want to carry on for a few years to get a bit more wool on his back.
He reminded me that his dad had had a short period of retirement before getting Parkinsons, being ill for 5 years and then dying so really hadn't had much of a retirement at all.. He said something like "We know what we want to do in retirement, we've worked out that we have enough money to do it, so why carry on marking time?"
They bought a motorhome from savings (they subsequently updated it twice), and spent months away each year pursuing their hobby of watching wild birds and animals all over Europe, wild camping much of the time.
He's 72 now, and guess what - he's had Parkinson's for the last 5 years and it's now affecting him badly, but he and his wife have had 15 good years of doing what they liked most.
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I don't know the answer to 'how much should I take and when'? Both my parents died in their mid 50s when I was in my mid teens and I never expected to live to my current age, however:
1. A work colleague had a very well paid job, offered redundancy saw £££££ signs and took it. He quickly spent it on a flash car and expensive holidays. The last I heard he was working as a security night watchman which barely paid his mortgage.
2. Another work colleague was encouraged to take the maximum lump sum at retirement by his family. Now he had loads of money they got hin to 'lend' them some. They never repaid a penny and I suspect they never had any intention of doing so. He now struggled to live day to day and ended up topping himself. I really hope he disinherited the grabbing bar stewards.
3. Neighbour didn't have much of a pension fund, but spent much of it on a new car. Had an outstanding mortgage that he couldn't afford to pay, so downsized to a mobile home park. Found the heating bills ridiculous and died (cold I suspect).
4. Another neighbour spent their pension lump sum on new motorbike and Mercedes. After a while his wife decided folk were laughing at her Perodua and so demanded, guess what, a Mercedes. They now both had what I suspect they wanted all along, Mercedes key fobs they could flash. They had to move to a less desirable area with lower cost housing.
I've a tidy amount, because I don't know how long it's going to be needed. My kids don't need it, as they earn much more than I ever dreamed of. As far as I'm concerned the government can have any surplus when I go.
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Food for thought bathtub Tom, you only hear about those that time it really well in retirement, much less about those that get wrong.
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>> 4. Another neighbour spent their pension lump sum on new motorbike and Mercedes.
When I started work the pension accumulated in 80ths and would therefore give somebody who 'went the distance' a pension of half salary and a lump sum of 3 times pension. Early noughties we were offered a 'Premium' scheme accumulating in 60ths. No lump sum but a partner pension included.
Latter worked well for me.
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>>When I started work the pension accumulated in 80ths
I had the same. redundancy was very lucrative. The best offer was pension payable from your fiftieth birthday, with service enhanced by up to six and two third years and a months salary for every years service up to a maximum of 36 years.
I was unable to get those terms, but I didn't come out too badly.
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but IIRC his pension at
>> that point was only £16,000 a year. I couldn't believe that a relatively young, fit
>> man didn't want to carry on for a few years to get a bit more
>> wool on his back.
It's not a bad pension, I think the average pensioner income is £15k, I bet there's loads on a lot less.
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For every story that starts "saved all his life, died a year after retirement" there is an alternative scenario "retired, cashed in pension, enjoyed himself, didn't expect to live to 93, died bankrupt".
None of us can be sure what will happen - we just have to accept that our actions have consequences.
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>> For every story that starts "saved all his life, died a year after retirement" there
>> is an alternative scenario "retired, cashed in pension, enjoyed himself, didn't expect to live to
>> 93, died bankrupt".
>>
>> None of us can be sure what will happen - we just have to accept
>> that our actions have consequences.
>>
Exactly - you need something that works either way- money doesn't matter unless you run out.
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>> It's not a bad pension, I think the average pensioner income is £15k, I bet
>> there's loads on a lot less.
>>
Bear in mind he'd been earning maybe 3-4 times that at the bank, and maybe a bit less in his de-stressed job, not many people at 53 would take the decision he did and have the self discipline to budget accordingly.
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the maths for me is defer till the sipp runs dry
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Just returned from an afternoon soirée...third bbq in 4 days with a bunch of friends. Just the 6 of us officer. Albeit wearing three layers of clothing.
Opinion seems to be take state pension ASAP, topping up tax free allowance of £12,570 with drawdown from remnants of private pension.
Spend it on travel and widening of one’s life experiences in due course when allowed. Health and faculties permitting.
Otherwise pies n pints and a darned good social life with chums. Beer garden visits now organised, train & bus timetables sorted. Lancaster, Ulverston, Leeds & Morecambe/Bare. Not all on the same day.
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>> ....Lancaster, Ulverston, Leeds & Morecambe/Bare.
>>
....didn't have you down as a naked rambler....
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>> >> ....Lancaster, Ulverston, Leeds & Morecambe/Bare.
>> >>
>>
>> ....didn't have you down as a naked rambler....
>>
For your future delectation, ‘The Little Bare’ is a super, friendly micro pub at Bare. A short walk along the prom from Morecambe. Handy for Bare station, change at Carnforth for Silverdale, Arnside, Grange over Mud, Cark & Cartmel ( horse racing and fine dining) etc.
A grand day out along the Cumbrian Coast Line to Carlisle, returning on the Settle- Carlisle or West Coast main line to Lancaster, using your Senior Rail Card as we frequently do.
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Some salutary stories from Bathtub Tom up there. It seems incredible to me that people in or near retirement should spend a sizeable chunk of their irreplaceable assets on a new car when they have outstanding mortgage debt. The mortgage represents the roof over your head, a most basic essential, and mortgages don’t go away if you can’t afford them. Unfortunately the house does. A car, especially a new one, is a rapidly depreciating asset. OK, we are all different but when penury is a realistic possibility one would hope that a little foresight would apply.
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I find it incredible that anybody wouldn't pay off the mortgage. That said I know somebody with a lifetime mortgage of £250k at a low rate who has no intention of doing so, and could do so if he wanted.
Banks are very happy to lend their umbrellas to people who aren't being rained on.
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Paying off the mortgage was one of the most liberating decisions I have made.
Suddenly any threat to the roof over ones head disappears. You have an asset that can later be turned into cash if you need to. Even with only a basic level of income the ability to carry on relatively warm and well fed is no longer under threat through job loss, ill health etc etc.
Why anyone would buy a new car in preference to clearing the mortgage is beyond me unless you have a terminal disease!
Last edited by: Terry on Mon 5 Apr 21 at 11:05
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>> Why anyone would buy a new car in preference to clearing the mortgage is beyond
>> me unless you have a terminal disease!
MAybe they anticipate an inheritance.
That or 'something will turn up'.
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>>Paying off the mortgage was one of the most liberating decisions I have made.
Second best day of my life!
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Paid orf mine when I was 39 and I only had the mortgage forra few months.
Bin lucky with the 10 properties I've bought n' sold o'er the years I 'spose.
Plan on marketing this place in June, only been here since last august :)
Places in Cornwall are selling like hot pasties at the mo - coming under offer on the same day they come to the market.
Crazy!
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A mate of mine is currently looking to buy. These days you can't even get a viewing appointment if you haven't got a firm offer on your property. He's seen one place which was up for a price but they are taking offers over the price and will take the best fit (i.e. price and status of sale) and it is likely to go for beyond it's advertised price. His place did too.
He had it on Rightmove and had 14 viewings in the first day, with three offers. Rightmove did everything, pics, appointments and sussed out the punters, plus sorting put who was prepared to pay most for it (over the advertised price) and all for a fraction of the price of a local agent.
I'm not sure I could be bothered with that now.
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>>He's seen one place which was up for a price but they are taking offers over the price and will take the best fit (i.e. price and status of sale) and it is likely to go for beyond it's advertised price. His place did too.
Clearly a nice place in 'the right' area. We had 8 viewings for ye olde cottage, the agent expected a bidding war, but one of the 3 bedrooms was really a walk-through rather than a bedroom, and that held it back.
We accepted an offer £5k below asking, and that nice Mr. Rishi gave it back to us via the stamp duty holiday.
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Itchy feet dog, where you off to now?
Last edited by: VxFan on Tue 6 Apr 21 at 02:38
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>>Itchy feet
All my life!
>>where you off to now?
Did I mention the shire of Hereford ;)
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I guess you like moving :)
And some don't, which reminds me of a woman near where I grew up. She was born, lived her whole life and died in the same house. Never owned it either, paid rent her whole life.
I think you did now you mention it, found anywhere you like?
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>>I guess you like moving :)
It keeps you on your toes :o)
>>And some don't, which reminds me of a woman near where I grew up. She was born, lived her whole life and died in the same house. Never owned it either, paid rent her whole life.
I envy that in a way - bet she knew everybody and everything, although I'm glad I'm not still living in a top floor pre-war council house in south London anymore.
>> found anywhere you like?
Not really started looking yet TBH. I keep looking at places in Cornwall, but they want too much (trying it on!)
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I take it, they are just going to let the bank take the property to sell when they die?
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State Pension deferral - Fursty Ferret
