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[Migv6 le Frog Fan]

Of course, if Rachel from complaints decides to raid private pensions, then any plans Im making will disappear. 
I might be retiring this year if Gormless Gordon hadnt already stole a big whack of my pension years ago.

[Migv6 le Frog Fan]

Is it from effectively getting taxed twice

Its not, as far as I know.

[LC0112G]

My state pension age is 66, which is 28th October this year.
That aside, Im a bit lost now. State pension is currently £12000 pa (within a few quid). If I pay 20% tax on it, I make that approx. £9500.
I dont understand where the £7600 figure comes from.

Full state pension is £12K ish. I have no idea if you're getting the full amount, or some lesser amount. Plus I misread your example as meaning your predicted SP would be £9500, not the full £12K.

However, the maths still holds - the payback for a single years deferral is still about 14 years. Example...

You take SP of £12K at 66, pay 20% tax on it (so you actually receive £9600), stick it in the bank at 4%, and at 67 you have a SP of £12K p/a, plus a "lump sum" in the bank of £9984.

Defer for a year, then at 67 you have a SP of £12696 p/a, and no "lump sum" - a gain of £696 p/a for life.

The payback is therefore (£9984/£696) 14.34 years, so you have to live to 80.34 years old to 'win'.

[Migv6 le Frog Fan]

Yes I will be entitled to the full amount. 
I think I understand your sums, so will have to rethink what I was thinking of doing.
There is still the " bird in the hand" aspect to consider, but at the end of the day it really does depend on gambling on how long we are going to live, which is a complete unknown.
I suppose the only thing to do is base it on the average. Although Im doubtful I will make it into my 80,s, or that I even want to if Im honest.
Thanks. 

[LC0112G]

It's actually better than my maths, because you won't get the whole £12K/£9.6K on day one to put in the bank for a year. You'll get 12 monthly payments of £800. The first £800 will earn 4% interest for 12 months, the second £800 for 11 months, the third £800 for 10 months etc, etc and the final £800 for one month. Therefore, whilst the headline APR interest rate on your saved pension monies might be 4%, the actual interest earned will only be half that - averaging out at about 2%, so the 'lump sum' will only have about £192 interest added to it at the end of the first year, making a total of £9792.

The payback is then (9792/696), or 14.07 years.

Whilst Stemo might like a bird in the hand, it's no good if you pluck, stuff, and roast for an hour to make a meal. Give a man a fish and he eats for a day. Teach a man to fish and he becomes alcoholic. Or something like that.

[Varche]

I have a friend who has planned his life around living till he is 86. First time I had ever heard a peer talk of their end date. Quite a wake up call it was!

[Migv6 le Frog Fan]

It's actually better than my maths, because you won't get the whole £12K/£9.6K on day one to put in the bank for a year. You'll get 12 monthly payments of £800. The first £800 will earn 4% interest for 12 months, the second £800 for 11 months, the third £800 for 10 months etc, etc and the final £800 for one month. Therefore, whilst the headline APR interest rate on your saved pension monies might be 4%, the actual interest earned will only be half that - averaging out at about 2%, so the 'lump sum' will only have about £192 interest added to it at the end of the first year, making a total of £9792.

The payback is then (9792/696), or 14.07 years.

Whilst Stemo might like a bird in the hand, it's no good if you pluck, stuff, and roast for an hour to make a meal. Give a man a fish and he eats for a day. Teach a man to fish and he becomes alcoholic. Or something like that.

Makes sense. Although as Im planning to work for four years after pensionable age,  through years 2,3,4 the figures will tip the balance to a degree in the other direction as the money accumulates ?
The state pension and probably tax thresholds will also change through that period too.

[LC0112G]

It's actually better than my maths, because you won't get the whole £12K/£9.6K on day one to put in the bank for a year. You'll get 12 monthly payments of £800. The first £800 will earn 4% interest for 12 months, the second £800 for 11 months, the third £800 for 10 months etc, etc and the final £800 for one month. Therefore, whilst the headline APR interest rate on your saved pension monies might be 4%, the actual interest earned will only be half that - averaging out at about 2%, so the 'lump sum' will only have about £192 interest added to it at the end of the first year, making a total of £9792.

The payback is then (9792/696), or 14.07 years.

Whilst Stemo might like a bird in the hand, it's no good if you pluck, stuff, and roast for an hour to make a meal. Give a man a fish and he eats for a day. Teach a man to fish and he becomes alcoholic. Or something like that.

Makes sense. Although as Im planning to work for four years after pensionable age,  through years 2,3,4 the figures will tip the balance to a degree in the other direction as the money accumulates ?
The state pension and probably tax thresholds will also change through that period too.

According to this calculator ....https://www.moneysavingexpert.com/savings/regular-savings-calculator/ ... if you save £800 per month for 4 years at a 4% APR interest rate, you'd end up with a pot of £41644 (including £3244 interest). This assumes you don't have to pay tax on the interest - you're only allowed £1K interest per year tax free.

If you defer for 4 years, your £12K pension would be increased to £15036 per year. (£12K * (5.8% ^ 4))

So the choices would be £41644 lump sum plus £12K p/a pension for life, or no lump sum and £15036 p/a pension for life. The payoff period is (41644 / (15036-12000)) = 13.71 years, so you'd be 83.7 years old when you broke even.

Impossible to predict future tax thresholds, allowances and rates, but you should note that while the (scam of!) the pension triple lock exists, it's basically guaranteed the SP will increase faster than inflation and savings interest rates. Sooner or later the triple lock will have to be changed, modified or scrapped, but for the time being it's still in place.

[Migv6 le Frog Fan]

Thanks for all the info. Very helpful indeed.

[TheBoy]

My DC pensions don't appear to have updated (not sure I know the frequency), but I reckon I've lost a fortune over the last week or 2, so guess I'll have to try to be nice to my bosses for a bit longer

On the upside, my DB one is backed by the Crown, so if the company goes tits up, the taxpayer will cough up.  Her DB pension is not in such a good place

[Mr Skrunts]

My bank

Been with them for years, never been over drawn and never paid interest or a  charge on my credit card.

Waited over a week to open a Business account simply to be told NO, not a trade we want to help.

Their loss.

[STEMO]

My bank

Been with them for years, never been over drawn and never paid interest or a  charge on my credit card.

Waited over a week to open a Business account simply to be told NO, not a trade we want to help.

Their loss.

Don't take it personal, it's quite common.

[STEMO]

Here's an interesting anomaly, Albs. New state pension due to rise by 4.1% this month, the figure linked to earnings last September. But certain elements only rise by CPI.....1.7%.
From money mail:


Deferred new state pension: Many people put off their start date in exchange for higher payments later in retirement - read our guide to whether deferring your state pension might be worth it here.
The extra sum you get for having deferred will rise by 1.7 per cent.

[Migv6 le Frog Fan]

Got a link Steve ?

[Raeturbo]

 Idiots who don’t pronounce their Ts 😡 lazy bastards.