If you leave your job before your normal retirement age, you can keep your pension benefit on deposit in the plan. This is called a deferred pension. If you think you may work again for an employer that participates in BC's Municipal Pension Plan, you may consider leaving your pension benefit on deposit in the plan.
You can then restart contributions to the plan, which may increase your future pension benefit. A pension is a significant financial asset that will provide you with a lifetime monthly income. After you reach your earliest retirement age and before you turn 71 the age when you have to start drawing your pension , you may apply to receive a monthly pension that will continue for your lifetime. If you leave your job, you may consider transferring the commuted value of your pension out of the plan, but first be aware of the many advantages you enjoy as a plan member:.
If you have any questions, contact the plan through My Account. Home Tax Guides Pensioners What is state pension deferral? What is state pension deferral? Updated on 26 July Why would I defer my state pension? Some of the most common might be: There is no financial need for you to take the income immediately and you regard the financial terms for deferral offered by the Pensions Service as an attractive form of saving.
You are putting off claiming state pension until you have stopped working and may then pay no tax or a lower rate of tax on an increased regular state pension. You are using deferral as a method of saving tax by converting taxable pension into a potentially tax-free or lower-taxed lump sum. The exact tax treatment will depend on your circumstances when you take the lump sum note: a lump sum is only available if you reached state pension age before 6 April You are using deferral as a method of maximising your tax credits claim.
You are using deferral as a method of receiving a better value from your state pension if you are resident in a country where the UK does not give annual increases, for example, Australia. We look at some of these points further below.
What will I get when I claim my deferred state pension? Lump sum payment You can choose to take a lump sum rather than an increased rate of pension. Example Fred and Elsa deferred their state pensions from 6 April If you reach state pension age on or after 6 April If you defer claiming, you may get extra state pension when you decide to claim it. What is the effect of taxation when I decide to stop deferring?
What happens if my tax rates change? What is the effect of deferral on tax credits? Where can I find more information? What income is taxable? What tax allowances am I entitled to? What tax rates apply to me? How is my tax collected? What if I cannot pay my tax bill? Do I need to complete a tax return? Self Assessment: understanding the basics What is Simple Assessment? How do I claim tax back? How do I claim back tax if I complete a tax return?
How do I claim back tax on savings income? How do I claim a marriage allowance refund? How do I claim back tax on a payment protection insurance PPI pay-out? Should I use a tax refund company? What is National Insurance? Find out about delaying your pension For advice about increasing your workplace or private pension, speak to a financial adviser. Find a financial adviser through Unbiased. Step 3 : Check what other financial support you could get. Check what financial help you could get if you: are on a low income need help paying your rent need help paying your heating bill are claiming benefits and the weather is cold are disabled You can also get free bus travel if you: apply for a bus pass.
Step 4 : Decide when to retire. Get advice on planning your pension and deciding when to retire. Is this page useful? Maybe Yes this page is useful No this page is not useful. Thank you for your feedback. Report a problem with this page. What were you doing? HMRC will check this at the end of the tax year, and if too much tax has been deducted you'll get a refund. But if you haven't paid enough tax, you'll have to make up the difference.
Find out more in our guide to tax in retirement. If you have retirement income from other places, such as a company pension, deferring your state pension might be a good deal - you could treat it like a really good savings account. Deferring may also appeal if you've retired to a country where your state pension isn't subject to the UK's annual increases, such as Australia.
If you reached state pension age before 6 April , deferring your state pension for a year only really pays off around nine or 10 years after you decided to take your pension. Take your health into consideration - if you're fit and healthy, you could end up with much more money as you get older.
Find out more: How much will you need to retire? Our table below looks at the net loss or gain that will determine whether deferring would be profitable within different time frames. They do not take into account that what you'd give up and the extra you'd collect would increase in line with state pension rises.
Claiming extra state pension will affect any benefits you receive, such as pension credit , house benefit and council-tax reduction. This is because the extra amount you get counts as income.
This all depends on your circumstances, what you want to spend the money on and, of course, when you reach state pension age. For those who reached state pension age before 6 April , the extra pension offers the best deal at the moment, as the interest rate on offer - at For those who reached state pension age after 6 April , deferring your state pension is no longer an amazing deal. The long wait to recoup what you've given up - 17 years - means there's a risk you could not live to earn back the extra pension you deferred for.
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