Delaying when you take your pension

We have an exciting amount of choice in our lives these days. Whether it’s the way we shop, or how we communicate, there’s more freedom over how we do things. This is also true when it comes to how you choose to retire.

And because we're living longer, delaying your retirement might be one way to approach it.  You could take your time and ease into things.

More and more of us are choosing to extend our working-lives.

If given the opportunity, more and more of us are choosing to postpone retirement. Perhaps you don’t feel ready to retire yet because you still enjoy your role at work. Or maybe you wouldn’t have enough money to live on if you retired right now, so you want to put a bit more into your pension savings first.

If you are thinking of postponing the date you originally chose to retire when you set up your pension, one of first things we’d recommend, is contacting your plan or scheme provider to talk through your options.

Choosing to phase your retirement 

More and more of us are choosing to extend our working-lives. That could mean leaving full-time employment and going part-time, or trying something new like starting your own business. By continuing to work you may be able to contribute more money into your pension and take advantage of the tax benefits in doing so. That might mean you could have a bigger pot when you do retire completely.

You can delay your State Pension too

Although you can't take your state pension before your state pension age, you can delay taking it until a later date. If you do, when you start drawing it down, you will receive a higher income that is equal to the amount of pension you would have got, plus interest. 

Key things to consider

  1. By delaying when you take your pension, your pension funds may have grown but there’s a chance they might have gone down in value too. It could mean you have less money when you come to take your pension and you may not get back what you put in. Charges will also continue to be applied whether or not you withdraw any money from the fund.
  2. If you eventually decide to use your pension savings to provide an income, there is no guarantee you will receive more, or even the same amount as if you were doing so now. For example, annuity rates may have changed.  In addition, the income you lose out by delaying, may outweigh any growth on your fund from leaving it where it is.
  3. There may be guarantees that you could lose, or restrictions or adjustments that are applied to your pension, that you will need to consider if delaying taking your pension beyond the original retirement date.
  4. State benefits that you may be entitled to, may be affected if you delay your retirement date.

More information

We are not recommending a particular retirement option, or course of action, over another. There are other options available, which you can read more about using the related links below or by watching our video.

In addition to the support we offer, we recommend that, from age 50, you seek impartial guidance from Pension Wise, the free service from the government that is available on the internet, over the phone or face to face.

Check everything thoroughly with your provider too, as although you no longer have to buy an annuity by your 75th birthday, there may be similar-type rules specific to your plan or pension scheme.

Further information about tax and deferring your State Pension can be found on the  website. The Pensions Advisory Service can also offer general pension guidance.

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