Defer State pension to gain £000s

Many people could gain thousands of pounds in retirement income by deferring the date when they first get their State pension, says the Daily Telegraph.

Under current rules you get 10.4% more for every year you defer. Some people could ‘bridge the gap’ by drawing money from their company or personal pension funds – and paying no tax on that income. The wheeze will only work for men aged over 63 and women over 61.

The Telegraph’s article makes a serious effort to get across a good idea, but misses out a few important points. Deferment can make sense if you are married, because your spouse can inherit part of your pension rights, but if you are single and/or in poor health you can lose more than you gain. Still, the Telegraph is right that under the new rules from 2015, with careful planning many people will be able to cut the tax they pay on at least some of their pension income. Ask us how.