A recent article in “This is MONEY” claimed that deferring your State Pension for just one year could net you £10,000 over the rest of your lifetime. Loads of assumptions I know, and based on average life expectancy, but the principle is very sound.
The real winners are those reaching State Pension age before next April. They get a boost of 10.4% to their future income for each year of deferment. For those reaching retirement age later the rewards are less but still worth considering.
What is even more interesting is the amount of cash you can take from your pension pot entirely tax free if you defer your State Pension. If your personal allowance is not being reduced by State Pension income you can withdraw up to your personal allowance (£10,600 in 2015/2016) each year entirely tax free IN ADDITION TO THE 25% OF THE FUND YOU CAN ALREADY TAKE TAX FREE. If your pension pot is anywhere near average you could get the whole lot out tax free in just a few years.
That makes the whole exercise almost a no-brainer. If you need to know more talk to your adviser (find out what it will cost first), contact PensionWise the Government’s free guidance service or, even better, use the box on the right to book a free discussion with me.
Be sure to share this with anyone about to reach State Pension age or thinking of cashing in their pension pot.
Even if this post doesn’t apply to you I urge you to sign up to receive future posts by using the box below.
Topics I will be covering shortly include :-
- The five reasons why last year’s pension investment strategies no longer work
- Why Junior ISA’s could make you very unhappy
- The three reasons why you need to review the death benefit nomination for your pension plan
All this information is free. The next post could be essential reading for you.
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