Pat, 68, from Rochdale, has said she deeply regrets deferring her state pension and feels she was not given all the facts before making the decision.
The former teaching assistant turned 66 in August 2023 and deferred her state pension for 13 months.
Pat, who did not wish to give her surname, is now a part-time exam invigilator, but this income, coupled with her deferred state pension, now makes her liable for tax.
State pension deferral allows you to delay claiming your pension, which can lead to increased payments when you eventually claim.
If you retired after 6 April 2016, you get an extra 5.8 per cent each year you defer.
People who delayed taking their state pension before the new state pension was introduced on 6 April 2016 were entitled to a more generous rate of 10.4 per cent extra a year, and they received this uplift for as long as they delayed.
squarePROPERTY AND MORTGAGESWe will struggle to sell our flat - it will cost us £100,000 to extend the lease
Read More
Pat was projected to receive £10,845 for her state pension once she became eligible in 2023 – rising to £11,766 in 2024 as a result of the triple lock mechanism – but as a result of choosing to defer her pension, and not taking it immediately, she gets a larger amount.
She also receives £1,259 in income in the 2024-25 tax year from her exam invigilating which takes her over the personal allowance of £12,570 – the amount you can earn before paying income tax.
She still has a higher income overall if she had not deferred – but she wishes she had not delayed the payment, as she would have started receiving the money 13 months earlier, and would have avoided having to lose as much of it to tax.
Pat says she felt misled by the Government about the advantages of deferring her state pension.
“Being on a low income my whole life, I have always been really careful with my money, and had I been in possession of the full facts, I would never have [deferred]. I feel misled,” she said.
“I regret deferring my pension because I am now going to have to pay tax on the money that I would have had tax-free had I taken it at the time. I was not given all the facts about this, only told that it was the sensible option because it would give me more money per month.”
Data from a freedom of information (FOI) request by pension provider Royal London, shared exclusively with The i Paper found 41,938 people claimed a previously deferred state pension in 2023-24.
According to the data, over 10,500 pensioners postponed their state pension for five years or more, with 4,435 having delayed it by ten years or more.
There were also 591 people who had not claimed their pension for 20 years or more.
Lily Megson-Harvey, policy director at My Pensions Expert, said: “Ideally, anyone considering deferral would automatically receive a clear breakdown of pros and cons, including how long it may take to recoup the deferred payments, and be directed to appropriate help if they’re unsure.”
A spokesperson from Royal London said: “While delaying can lead to higher weekly payments later on, people choosing to delay claiming under the current system may not live long enough to recoup the money they missed out on, especially if they are basic rate taxpayers.”
Pat described feeling “angry” for following the advice to defer her pension and said she was concerned about not living long enough to see the benefit of delaying.
Your next read
square SAVING AND BANKINGHow I Manage My Money: Mum, on £2,000 a month in benefits, after caring for elderly parent
square MONEYI dreamt of retiring to Portugal. Now I’ve moved in my 30s – bills are half as much
square PENSIONS AND RETIREMENTI spent £25,000 of my pension on three acres of woodland. It’s nearly doubled in value
square PENSIONS AND RETIREMENT Money ClinicI want to withdraw my first pension lump sum. How much tax will I pay?
Sarah Pennells, consumer finance specialist at Royal London, said those deferring to get extra money in the future may look attractive, but you are giving up the right to receive any state pension payments until you stop deferring, and it could take years to see the benefit.
“If someone defers their pension and then dies, their surviving spouse or civil partner will only receive the extra pension if the person who deferred reached state pension age before 6 April 2016.
“These figures highlight why it’s so important to think carefully before making this decision,” Pennells added.
A spokesperson for the Department for Work and Pensions said: “We understand this is a significant decision, which is why everyone invited to claim their state pension is directed to guidance on our website, including advice on deferral and potential tax implications.
“Whether deferring is the right choice depends on individual circumstances and we encourage anyone considering it to check their options carefully.”
Hence then, the article about i regret deferring my state pension it left me with a tax bill was published today ( ) and is available on inews ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
Read More Details
Finally We wish PressBee provided you with enough information of ( I regret deferring my state pension – it left me with a tax bill )
Also on site :