Deferring my Occupational Pension from 65 to 66 Advantage !

HynesMA

Registered User
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I am in Company Occupational Scheme (Defined Benefit) with a pension pot value of about 200,000 + , is there an financial advantage of deferring it for another year ?
Regards,
MH
 
Are you talking about postponing your retirement and continuing to contribute to the scheme for another year?

It's a defined benefit scheme so the "pension pot value" figure is pretty meaningless. What you will get from the scheme is an annual pension of X amount, "X" usually being determined by reference to your length of service in the scheme and your salary at the time you retire ("final salary"). Focus on that figure.

If you defer your retirement for a year and are allowed to continue to participate in the scheme and to contribute to it, X, the amount of your pension will be increased for (probably) three reasons:
- You'll have an extra year's service in the scheme, so instead of being calculated as (say) 26/60ths of your final salary, your pension will be 27/60ths of final salary. You will have worked and contributed for 27 years instead of 26. (But you won't get this uplift if you have already hit the maximum, which is usually 40/60ths of final salary. In that event they won't let you contribute to the scheme even if you do defer your retirement.)
- Your pay may or will go up during the final year, so the pension will be based on a slightly higher final salary.
- The scheme will usually offer an actuarially calculated uplift, reflecting the fact that your pension is going to be paid for one year less than it would be paid for if you retirement at the standard age.

Only way to find out what all this adds up to, in terms of an increase to your annual pension, is to ask the scheme administrators. Then you can decide whether it's worth it to you to work for an extra year to get that increase.
 
Thank you TomEdison ...............
My position i am not allowed contribute any more to the main Scheme (Defined Benefit) but i can contribute the maximum allowed to my AVC's of which i have over 100 k at the moment ......... and not sure about the drawdown rules or taxation !

Regards,
MH
 
OK

Presumably, you're not entitled to contribute any more to the main scheme because you are maxed out — you have accrued as much service as the scheme allows you to accrue. So working for another year and contributing more to the scheme is not an option for you.

When you talk about deferring your occupational pension for another year, that suggests that your pension is (or very soon will be) due to start. Most defined benefit pension schemes have a "normal pension age" (which is usually the day you turn 65). Have you reached your normal pension are, or will you reach it soon, and are you asking about deferring your pension so that it doesn't start until a year or so later?
 
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