Many thanks for sharing your professional expertise, James. That’s very interesting, and (obviously) not something I was aware of. I guess it will apply to a relatively small proportion of people in this age group, but for those for whom it does I can see it could save them a lot of money in tax. Thanks again for taking the trouble to share this information, and for your kind comments about my blog 🙂

This is a great post, thanks for sharing.

In my work as a Certified Financial Planner, this is a common question that comes up with clients.

One thing that’s worth mentioning is that if you reached State Pension age before 6th April 2016, and haven’t yet claimed it, your pension will be deferred under the old rules. Under these rules, your State Pension was increased by 10.4% for each year you deferred. When it comes into payment, you can either take it as an extra income, or have the deferred amount paid as a lump sum.

A really attractive part of the lump sum option is that it’s paid at your current tax rate (not your marginal tax rate). This means that if you’re a non-taxpayer when you claim it, you could potentially get the whole thing tax-free.

We helped quite a few clients do this, with some of them receiving more than £20,000 tax-free!

Hope this helps your readers. Really enjoying your writings, keep up the great work.

Best wishes,

James

Thank you, Reverend 🙂

It’s true, nobody should rely solely on the state pension. But for many people it does provide an important source of income in later life. Even before the state retirement age, knowing that in a few years you will have this additional income stream can make it more feasible to retire early. I am three-quarters retired these days and living partly off my savings and investments. But I know that once my state pension kicks in I will be able to reduce the amount I am drawing from these if necessary.

An interesting read – I didn’t even know you could defer your state pension.

I’m a few years off retiring (well, currently 28!) so I’m doing my pension planning now so that I can retire earlier WITHOUT relying on my state pension.

All The Best

The Reverend