One question we get asked a lot by client is 'what are my options with my State Pension and is deferring for me?'. So we sat down and made this short and sweet guide on what you can do when you receive your letter, and what are the advantages and disadvantages are...
2. It's a question that we frequently get
asked about - what your options are and
whether or not to defer it...*
https://www.gov.uk/deferring-state-pension/what-you-get
*More info here -
Your State Pensions is not automatically activated;
you need to tell the Pension Service what you intend
to do once you receive your letter...
3. Deferring your State Pension could
increase the total amount you get
when you claim it.
However any extra payments you
get from deferring could be taxed.
5. If you opt to delay taking your pension, then it increases by 1%
weekly, so long as you defer it for a minimum of 9 weeks.
Over the course of a year, this would mean it would increase by
almost 5.8%
The extra amount is paid alongside your State Pension.
6. If you defer for at least 12 months in a row, you can also claim a
one-off lump sum payment.
This will include interest of 2% above the Bank of England base
rate.
However - youโll be taxed at your current rate on this lump sum.
(So if youโre a basic rate taxpayer your lump sum will be taxed at
20%)
8. The downside to delaying is that you're missing
out on a year's income from your pension.
So ask yourself - have you got enough set
aside if you're thinking of doing this?
9. Before making any major financial
decisions involving your pension, it is
best to seek financial advice if you do
not feel confident or have more
questions...
10. The value of an investment may fall as well as rise.
You may get back less than the amount invested.
Taxation rules can change at any time and are dependent on individual circumstances.
Reddington Wealth Management Ltd is an Appointed Representative of and represents only St. Jamesโs
Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority.
