[Finance] Should Pensioners Pay Tax?

[Weststander]

I wasn’t born before 1951 or took my pension before 2016 so it’s just related to contributions paid that results in an additional “Protected payment” of approx £78/week on top of the new state pension of £185/week to give £263/week or £13.7k / year. This is going to increase by 10% to £15k in April.

I always thought you were much younger than that, based on your positive, youthful posts

 

[Icy Gull]

How? I have recently started to receive my state pension with full entitlement and its nothing like that? Me thinks you have made a mistake.

The only way I know of getting more is not to draw your state pension for a number of years, then when you do it is obviously more per week. You used to be able to take it as a lump sum as an alternative, but not sure if you still can. From memory you get an extra percentage for leaving it in too. So worth doing if you don’t actually need it when you reach retirement age.

 

[Nicks]

Oddly, having paid NIC in full all my life mine is saying I get the maximum, which is £185.15 per week, yours is a tenner more?

I think I know why as when I enquired about my forces pension,( because back in the day , boys time didn't count) I was told my State Pension would be slightly enhanced because of that.

 

[East Staffs Gull]

The only way I know of getting more is not to draw your state pension for a number of years, then when you do it is obviously more per week. You used to be able to take it as a lump sum as an alternative, but not sure if you still can. From memory you get an extra percentage for leaving it in too. So worth doing if you don’t actually need it when you reach retirement age.

A person’s state pension calculation includes a ‘better of’ comparison. If the total of a person‘s accrued State Basic Pension plus SERPS entitlement plus State Second Pension exceeded the new maximum state pension as at 5 April 2016, the person receives the higher amount. This might well apply, for example, if someone earned above or close to the National Insurance Upper Earnings Limit for the majority of their working life and who wasn’t contracted-out of SERPs for any significant length of time.

 

[GOM]

Isn't the £10,600 state pension for newer pensioners, ie those born after 1950?

Yes, I was referring to the newer full state pension in mentioning amounts. The principle is still the same though, state pension gets the personal allowance first, then others until it all allocated, unless you contact them to alter it.

 

[A mex eyecan]

I’ve just taken a look at mine.
I‘m not eligible until May 2025, but shows me getting £11457. Not sure if that’s at todays rate or what it will be in 2025. It also says there is nothing I can do to improve that amount.

 

[Icy Gull]

Yes, I was referring to the newer full state pension in mentioning amounts. The principle is still the same though, state pension gets the personal allowance first, then others until it all allocated, unless you contact them to alter it.

You seem au fait on this. Am I right in thinking those men born after April 51 get more, if receiving a full state pension, than those born before?

 

[dazzer6666]

The only way I know of getting more is not to draw your state pension for a number of years, then when you do it is obviously more per week. You used to be able to take it as a lump sum as an alternative, but not sure if you still can. From memory you get an extra percentage for leaving it in too. So worth doing if you don’t actually need it when you reach retirement age.

Not taking it is basically taking a punt on your life expectancy isn’t it ? May be better to take it and invest elsewhere if not needed.

 

[Icy Gull]

Not taking it is basically taking a punt on your life expectancy isn’t it ? May be better to take it and invest elsewhere if not needed.

Same discussion I had with my son. If it takes you into 40% tax drawing it down and you would rather have up to £50 more a week in pension payments for as long as you can hang on, it doesn’t sound that much more attractive

 

[dazzer6666]

Same discussion I had with my son. If it takes you into 40% tax drawing it down and you would rather have up to £50 more a week in pension payments for as long as you can hang on, it doesn’t sound that attractive

This is where pension flexibility on any other (private) pensions helps…….can try to manage drawdown and income overall to stay within tax bands……

 

[sparkie]

I need to work 3 more years contributing before I get the full £185.15 a week.

Better than I thought tbh.

 

[Icy Gull]

This is where pension flexibility on any other (private) pensions helps…….can try to manage drawdown and income overall to stay within tax bands……

True but can you avoid going into 40% if you are on the cusp and take the lump sum of say 20k from your deferred State pension?

Should I be speaking to @Steve Foster

 

[East Staffs Gull]

You seem au fait on this. Am I right in thinking those men born after April 51 get more, if receiving a full state pension, than those born before?

Hope you don’t mind me jumping in. The state pension system was last revamped in April 2016. Prior to that date the maximum combined Basic State Pension plus SERPS plus State Second Pension was greater than the new maximum, so people already in receipt of a state pension on that date (who by definition must have been born before April 1951) receive the higher amount.
Some people born after 1951 might also have earned a state pension as at April 2016 that is greater than the new maximum and will also receive the higher amount. Typically these will be higher earners who contributed the maximum number of years and who weren’t contracted-out of SERPS for any significant period.

 

[Weststander]

I’ve just taken a look at mine.
I‘m not eligible until May 2025, but shows me getting £11457. Not sure if that’s at todays rate or what it will be in 2025. It also says there is nothing I can do to improve that amount.

At today's rate.

 

[dazzer6666]

True but can you avoid going into 40% if you are on the cusp and take the lump sum of say 20k from your deferred State pension?

Should I be speaking to @Steve Foster

Possibly, but not me…….

 

[Icy Gull]

Hope you don’t mind me jumping in. The state pension system was last revamped in April 2016. Prior to that date the maximum combined Basic State Pension plus SERPS plus State Second Pension was greater than the new maximum, so people already in receipt of a state pension on that date (who by definition must have been born before April 1951) receive the higher amount.
Some people born after 1951 might also have earned a state pension as at April 2016 that is greater than the new maximum and will also receive the higher amount. Typically these will be higher earners who contributed the maximum number of years and who weren’t contracted-out of SERPS for any significant period.

Not at all, thanks!

 

[East Staffs Gull]

At today's rate.

Bang on. No one knows what the amount will be in 2025.

 

[Weststander]

True but can you avoid going into 40% if you are on the cusp and take the lump sum of say 20k from your deferred State pension?

Should I be speaking to @Steve Foster

Does he get a mobile signal in Monaco?

 

[Icy Gull]

Does he get a mobile signal in Monaco?

 

[Weststander]

View attachment 156557View attachment 156558

Is that part of his security detail?