Unofficial Christ's Hospital Forum

I've had my 'letter' (as you warned, Katharine!).

Since I intend to stay in work, can anyone advise me on whether to take it from the start (bank it and save it....). or defer it?

If I defer it, I gather that I would either get an 'increased pension' for life, from the moment I do start drawing it, or a lump sum - which would be taxed.

I'm not terribly good on things like interest rates and stuff - so can anyone offer advice as to what might be the best way forward?

kerrensimmonds wrote:I've had my 'letter' (as you warned, Katharine!).

Since I intend to stay in work, can anyone advise me on whether to take it from the start (bank it and save it....). or defer it?

If I defer it, I gather that I would either get an 'increased pension' for life, from the moment I do start drawing it, or a lump sum - which would be taxed.

I'm not terribly good on things like interest rates and stuff - so can anyone offer advice as to what might be the best way forward?

You need to look at your whole financial situation but one thing to bear in mind is that old age pension over and above the personal allowance (£5,225 in 2007/8 tax year) is taxed so, assuming you are earning enough to pay tax whilst working, the whole of your pension will be taxed and if your income without pension exceeds £34,600 (2007/8 tax year) or some or all of the pension takes your total income over that figure then you will pay income tax at 40% on that portion.

40%?

Crikey. Thanks for that. I'm glad I asked! As long as I continue to earn my salary, therefore, it could be better to leave the pension with Mr. Darling to look after - and then draw an increased pension when I do start (rather than a lump sum which would be taxed)?

I think I predicted your latter for November, didn't I? As you know, Kerren that I decided to defer. I just hope that kind Mr Darling will give it to me at the right time.

Make sure you get the correct form to give your employers, can't remember the reference, so that you stop paying National Insurance. Mine didn't arrive and it entailed a long morning on the phone trying to trace it - I was told that too many people were turning 60 this year I thought they knew about that many years ago. We were the group at CH which had to have three forms in UV.

kerrensimmonds wrote:40%?

Crikey. Thanks for that. I'm glad I asked! As long as I continue to earn my salary, therefore, it could be better to leave the pension with Mr. Darling to look after - and then draw an increased pension when I do start (rather than a lump sum which would be taxed)?

Are you sure ?????

Rather like leaving your ten year old daughter in the care of Gary Glitter, me-thinks !

kerrensimmonds wrote:40%?

Crikey. Thanks for that. I'm glad I asked! As long as I continue to earn my salary, therefore, it could be better to leave the pension with Mr. Darling to look after - and then draw an increased pension when I do start (rather than a lump sum which would be taxed)?

Just to clarify in case of misunderstanding you only pay 40% on the proportion of income above the upper threshold. You pay 22% (2007/2008) on the proportion below the threshold.

On re reading my original post it could be misconstrued as the £34,600 refers to TAXABLE income. You can actually have total income of £39,825 before paying at 40% being the £34,600 plus the personal allowance of £5,225.

Don't know whether or not that makes a difference or not.

Thanks, yes I did realise it was 40% when over the threshold!

kerrensimmonds wrote:Thanks, yes I did realise it was 40% when over the threshold!

and the cash up-front element of your pension is itself tax-free. Best check on all this - the pensions people have lots of leaflets and also you can phone them / visit the local tax office. They are pretty good face to face and wil answer questions clearly. What they will not always do is tell you how to "reduce" your tax

The advice I had heard was that de facto the return by leaving your money for the time being is considerably better than you are likely to get outside.

A useful site for all this is the discussion boards on
http://www.fool.co.uk
They also have all sorts of editorial stuff on money subjects
You might have to register but it is free (create a nickname before you go in!)

Sorry ladies - no rude quotes today.

Thank you (everyone) for all of that. I have just spoken to a (female) OB who says she is brought to the front to relate her story whenever there are pre-retirement 'do's' in her line of business. She deferred her pension for two years, and as a result gets 48p per week now, over and above what she might have achieved. She regrets not taking the money at the time and investing it (albeit paying tax on the income from both sources). So as has already been said, it depends on your circumstances and you need to take specialised advice (for which you might have to pay..). Onward and Upward, and anything to confound Mr. Darling......
Anyone know a good Financial Adviser?

Kerren this site might help.

There are links from it (can't copy and paste them unfortunately) which seem relevant to what you have described.

http://www.thepensionservice.gov.uk/ato ... rement.asp

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