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Legal & money

Working and Taking a Pension?

(4 Posts)
mischief Tue 17-May-11 18:14:20

I am 63, deferring my pension and am still in full time employment but I intend taking my pension and the lump sum in 2 years time.

I have just learnt what a con the government's strategy for encouraging us pensioners to continue working after retirement age is, especially if we are drawing our pension.

Don't think you are going to be quids in. Apparently, once you are 65 you can only have an income of up to £24,000 per annum then the government take 50% of everything you have over that amount. YES 50%. I couldn't believe it. That includes any pensions and interest on savings according to the 'Direct.gov.uk' website. No wonder the government wants us to work longer, they'll get loads of tax off us.

I was considering working past age 65 as I am fit and healthy but I will have to think long and hard about that now. I wouldn't mind paying tax at 20% which is the rate I pay on my salary, I think that would be fair but 50% is daylight robbery.

Is anyone else outraged at this, or am I just being naive.

glassortwo Tue 17-May-11 19:47:19

No you are not being naive, the goverment want their cake and eat it dont they, that is daylight robbery. Alot of people will have to think long and hard, thats if they are aware of it!

Dianalou Thu 19-May-11 14:40:17

Mischief, It is not as bad as you think.

What happens is that if you have income over £24,000 you lose the benefit of the special age allowance (£9,940 of tax free income) and continue on the normal basic rate allowance of £7,475 which everyone has.

All income over £7,475 will be taxed at 20%, exactly as it is now, unless you are a higher rate taxpayer.

I hope this is reassuring.

PierreMaurice Sat 21-May-11 08:56:12

Also note that whilst your basic state pension will increase each year by the greater of CPI, RPI or earnings, the additional pension resulting from the deferral will only increase by CPI. Another little way in which the government screws us all!