To defer or not to defer

[Rapido123]

Hi, if you leave Royal Mail employment do you lose out in any way if you defer your 60 and 65 benefits rather than take them immediately. Just checking out everything, thank you

[Hitcher]

Deferring them won't boost them as they're designed to be taken at 60 and 65.

[Gary55]

Definitely don't defer nra 60 as o don't believe it's backdated. Not sure about nra65

[RobertT]

There's pros and cons with taking your pension early, but no benefit whatsoever in not taking it at NRA!

If you take your benefits before Normal Retirement Age, they'll be reduced for early payment.
If you don't take them at NRA, you lose what you would have got during that time. So if you were to take your Age60 at 62 for example, you would lose those 2 years of pension. The same would apply with Age65 benefits taken after 65.


*There is no specific ability to defer your benefits, and if you asked the RMSPS and RMPP to do so they'd probably say you can't. But there have been cases of people who've effectively done so by not sending back their option forms, or not informing the pensions people when they move house(forms get sent to old address).

[linntroika]

I have considered deferring as my birthday is in February for my NRA65 , if i do defer would i not gain that years increase in pension and Cash balance if i decided to take it after 6th April when the new tax year starts - might be worth it to get the increase and its only 7 weeks longer

[Wullie10]

Surely if youre 65 it's take it or lose it ? Otherwise you could leave it till 67 or beyond , Not allowed.

[RobertT]

if i do defer would i not gain that years increase in pension and Cash balance

In theory, yes you would gain that inflationary increase. But you also have to factor in what the rules of the scheme say.
It may be the case that things change once you've hit NRA and have not taken your benefits?

I don't think those rules are available to view online, so I would suggest asking RMPP/RMSPS to clarify.

As I said upthread they will probably say you can't defer, but there are cases of people who have done so by not sending their forms back in time. So you could say it's possible to do it unofficially.

As far as I'm concerned, you can't change your birthday and faffing about trying to save a few quid isn't really worth it, and you should just take it when it's due!
But ultimately it's a choice you make for yourself.

Whatever you do, always make sure you understand any consequences.

[linntroika]

Many thanks Robert , i fill quite a few pension forms in for postmen and drivers at work, 3 of them forgot to take their pension at 65- one driver didn't take his until he was 69 loosing 4 years worth of pension
Im retired now so i might just take mine at 6 months early , wont loose a lot , then the only thing left is 2 months contributions on the collective plan .

Just off topic - i see lately that annuity rates are very good presently , best they have been in years - that will be another dilemma when it comes on what way to take my SIPP

[RobertT]

Many thanks Robert , i fill quite a few pension forms in for postmen and drivers at work, 3 of them forgot to take their pension at 65- one driver didn't take his until he was 69 loosing 4 years worth of pension

4 years is mad!

It reminds me of a thread I saw on the MSE forum a year or 2 ago, where a postie for only about 3 years in the 90's, moved house without telling the pensions people and completely forgot he had a RM pension until he was aged 76.

It probably wasn't worth a massive amount, but not only did he lose 16 years worth of payments, apparently there's a 6 year time limit on claiming, so he lost all claim to it going forward as well.

Just off topic - i see lately that annuity rates are very good presently , best they have been in years - that will be another dilemma when it comes on what way to take my SIPP

Annuity rates are higher than they've been for years, but not as high as they were when I first took an interest in the 1990's, when they were roughly double what they are today.

There was a time when you had to take out an annuity once you'd taken the 25% tax free from a personal pension. We now have the options of drawdown and UFPLS as well, which provide more flexibility.

As ever with pensions, the most suitable choice for you will depend on your own circumstances, etc.

[heapsy]

I have considered deferring as my birthday is in February for my NRA65 , if i do defer would i not gain that years increase in pension and Cash balance if i decided to take it after 6th April when the new tax year starts - might be worth it to get the increase and its only 7 weeks longer

Why would you do that? Ok, so the uplift is great. But you missed out in having ut when it was due. Nothing to stop you putting it in savings, tax free, to gain that extra bit. Or, drip feed into something for a bit of growth, assuming you don't need it straight away. You will lose out on the pension element if you defer. You cannot split them.

[NWpostie]

Many thanks Robert , i fill quite a few pension forms in for postmen and drivers at work, 3 of them forgot to take their pension at 65- one driver didn't take his until he was 69 loosing 4 years worth of pension

4 years is mad!

It reminds me of a thread I saw on the MSE forum a year or 2 ago, where a postie for only about 3 years in the 90's, moved house without telling the pensions people and completely forgot he had a RM pension until he was aged 76.

It probably wasn't worth a massive amount, but not only did he lose 16 years worth of payments, apparently there's a 6 year time limit on claiming, so he lost all claim to it going forward as well.

Just off topic - i see lately that annuity rates are very good presently , best they have been in years - that will be another dilemma when it comes on what way to take my SIPP

Annuity rates are higher than they've been for years, but not as high as they were when I first took an interest in the 1990's, when they were roughly double what they are today.

There was a time when you had to take out an annuity once you'd taken the 25% tax free from a personal pension. We now have the options of drawdown and UFPLS as well, which provide more flexibility.

As ever with pensions, the most suitable choice for you will depend on your own circumstances, etc.

4 years of missed pension is potentially £44,000 in total minus the potential lump payment

16 years payment potentially £56,000 assuming based on three years of service a pension of £3,500 a year, 6 years limit on claiming is harsh.

I will definitely be claiming my NRA60 and 65 but separately for tax reasons, the 67 is going to be an interesting one considering I'm paying £100 a week into my AVC, it should accumulate nicely.

As I read the pension threads, I learn from the mistakes by forum members, education is important for your financial future and I try to explain to others in my workplace unfortunately sometimes it goes right over their heads, you can only do so much.