Your State Pension

Your State Pension

If you are nearing retirement, you probably can’t wait to get your hands on your state pension, after all you have waited a long time to get some money back from the government , so why not?

One reason that you may wish to reconsider is that until April 2016, pensioners who delay taking their state pension will receive a generous 10.4 per cent boost to state pension for every year deferred. So you only have to live for 9 years to benefit from the decision.

The rate is twice what you can expect in returns from investing in equities – and is guaranteed by the government. It might be an attractive proposition for someone in good health with substantial private savings to replace the state pension for the years they defer or who is willing to carry on working.

The obvious risk is that you die before taking your pension and miss out on the income that you could have taken.

Even if you have already started taking your state pension, you can suspend taking it and benefit from deferral increases.

It has been estimated that the optimum period is 7 years’ deferral. Just deferring for two years could net individual retirees an extra £19,000of guaranteed lifetime income.

Men born before 6 April 1951 or women born before 6 April 1953 are eligible for the 10.4 per cent deferral rate. But keep your decision to defer under review in case the terms change. Younger people will receive a less generous rate of increase for deferring state pension of 5.8 per cent.

Download a leaflet by clicking link – https://www.gov.uk/government/publications/deferring-your-state-pension

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A pension is a long-term investment that typically cannot be accessed until age 55 (57 from April 2028). The level of pension benefits offered could change depending on the value of your investments (and any income they may generate).

The interest rates in effect at the time you begin receiving benefits may also have an impact on your pension income. The tax consequences of pension withdrawals will depend on your unique situation. In later Finance Acts, tax rates, tax bases, and tax relief may change.

The opinions expressed by Ray Best are meant to inform and educate. Before making any investment decisions always take advice that is pertinent to your investment personality and financial situation.

You are aware that past performance will not necessarily be repeated in the future, but you should be aware that persistent poor performance invariably will.

The value of an investment and the income from it could go down as well as up.

The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

UnaVida Wealth Management Ltd. is directly authorised and regulated by the Financial Conduct Authority (440577).

The guidance in this website is primarily aimed at a UK audience and is subject to regulation by the Financial Conduct Authority (FCA).

The Financial Conduct Authority does not regulate tax planning, estate planning, or wills and any form of legal documentation.