Taking 65 pension while still working

[scoobydo79]

Your thoughts please Guys. If You are taking your 60 pension and still working does it now make sense to take your 65 pension? Will You pay tax on the lump sum?
Many Thanks

[RobertT]

The normal things apply:

1. Your pension and lump sum will be reduced for early payment if taken before NRA.
2. The average person will get more by waiting until NRA.
3. There's no benefit in deferring past NRA.
4. The pension is income and taxed accordingly.
5. Any lump sum over 25% of pot value is income and taxed accordingly.
6. Section A/B members are likely to pay more tax on the DBCBS as they get a lump sum as standard, although that also depends on how you take your benefits(max lump sum or max pension).
7. Any income in one financial year over £12,570 is taxed at 20%, and any over £50,270 is taxed at 40%.
8. Taking your pension early is a personal choice.

[scoobydo79]

Thanks Robert. Also thanks for being on hand still for pension questions

[Wullie10]

I'll probably take my NRA 65 at 64 and take a small hit. Hopefully I can call it a day then. My thinking is if i go beyond 64 i could end up paying 40% tax depending on the lump sum. What a way to spend your last few years. Working harder than ever and paying top tax.... crazy. To think we originally were supposed to go at 60 so they'll have had an extra 4 years out of me. That's enough.

[heapsy]

The way to avoid higher tax is to cut back on overtime. If you're doing a lot, on top of your NRA60 pension, then that's the answer. You don't say when exactly, your birthday is. Could you finish just before and avoid the higher tax?

[Duran]

The way to avoid higher tax is to cut back on overtime. If you're doing a lot, on top of your NRA60 pension, then that's the answer. You don't say when exactly, your birthday is. Could you finish just before and avoid the higher tax?

If you take your cash balance as a lump sum you will hit 40% tax whether you do OT or not. Plus side is your cash balance is 25% tax free of your entire pension pot . My Cash balance being paid is £17.500 tax free £28.500 taxable. I estimate by November i will be paying 40% tax on my wages for the remainder of the tax year.

Remember there is to be a pension reform come October. Rachel Reeves will be looking to reduce the 25% tax free lump sums on private pensions. If not withdraw it all together. God help us.

[NWpostie]

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Remember there is to be a pension reform come October. Rachel Reeves will be looking to reduce the 25% tax free lump sums on private pensions. If not withdraw it all together. God help us.

And I would have thought Labour would be helping the working class, they really deserve the moniker "Liebour"

[RobertT]

Remember there is to be a pension reform come October. Rachel Reeves will be looking to reduce the 25% tax free lump sums on private pensions. If not withdraw it all together. God help us.

There are several ways pensions could be taxed more than they are now:

Reduction of the 25% tax free lump sum.
Reduction of the maximum tax free cash allowed down from £268k.
Allow pensions to be part of a persons estate when they die, meaning Inheritance Tax may be payable.
A further freeze to the Personal Tax Allowance beyond 2028.
Increase the higher rate of income tax, or lower it's threshold.

There's probably more.....

Until they have their review, we can only speculate.

[Sean06]

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Remember there is to be a pension reform come October. Rachel Reeves will be looking to reduce the 25% tax free lump sums on private pensions. If not withdraw it all together. God help us.

And I would have thought Labour would be helping the working class, they really deserve the moniker "Liebour"

Unfounded rumours

[sam63]

Just to add if you live in Scotland you pay 42% tax from £43663 which as you have your NRA 60 will mean most will pay 42% on the taxable element of NRA 65 and your monthly pension will be taxed at 42% also - cheers from “the Krankies”

[Duran]

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Remember there is to be a pension reform come October. Rachel Reeves will be looking to reduce the 25% tax free lump sums on private pensions. If not withdraw it all together. God help us.

And I would have thought Labour would be helping the working class, they really deserve the moniker "Liebour"

Unfounded rumours

Not Rumours at all. From the horses mouth. There will be a pension reform in October. They will attack tax relief on private pensions somehow i can guarantee you of that.

[Dorset Plodder]

You can bet on whatever they decide ..... I'll dip out! I'm a Shite Magnet Me

I'll probably end up retiring the month AFTER the Government Reduce any Tax Free Lump Sums and Increase the TAX on any remaining Pensions!

But you can put your mind at rest that there's probably Bugger All you can do about it! I also add my thanks to Robert T for returning with his sensible advice, at this confusing time for RM Pensions.

Of course there won't be these kind of problems in the future because there probably won't be a Royal Mail and if there is nobodies going to want to work for 20 years for the shitty company it's going to become!

[yellowbelly]

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Remember there is to be a pension reform come October. Rachel Reeves will be looking to reduce the 25% tax free lump sums on private pensions. If not withdraw it all together. God help us.

And I would have thought Labour would be helping the working class, they really deserve the moniker "Liebour"

Unfounded rumours

Not Rumours at all. From the horses mouth. There will be a pension reform in October. They will attack tax relief on private pensions somehow i can guarantee you of that.

I can see their thinking - you effectively get a freebie from the Govt. when you pay into a pension - their thinking is why should the plebs
get a double whammy with a tax free sum on the pay out too........

[heapsy]

If they did end or cut tax relief, it could be the biggest own goal ever.

[NWpostie]

Labour is Torylite v2.0, their MP pension is protected and funded by the taxpayer, even the Tories didn't dare to scrap our pension benefits and introduced triple lock.