Delaying your retirement


Once upon a time, it was simple: when you reached a certain age, you retired. Now it's not so black and white, and it can mean that you have a number of questions. Should you or could you consider delaying retirement? What will retirement change in your life? Read on to find some helpful suggestions and answers to some of the most common questions.

Do I have to retire straight away? 

The law has changed. Now, unless there is a valid reason - for instance for yours or another persons' safety or if your occupation is subject to a compulsory retirement age - no one can make you retire when you reach 65, 70, or even 80. For some people, delaying their retirement past the 'normal' retirement age might be a benefit financially as well as emotionally. For others, reaching 60 or 65 is something they've dreamed of. You are much more in control of when you retire now, than in previous years.

Can I go part-time?

How quickly you retire will depend on you and your employer. It may be possible to go part-time, depending on your circumstances, it may not. But for many people, working reduced hours is an excellent way to make the transition into retirement, without it being so final.

Do I have to take my State Pension straight away?

Not if you don't want to. The UK Government do not insist that you claim your State Pension straight away – even though it decides your State Pension Age.

What happens if I delay taking my State Pension?

Deferring your State Pension could increase the payments you get when you decide to claim it. Any extra payments you get from deferring could be taxed

The amount of extra State Pension you could depends on when you reach State Pension age

If you reach State Pension age on or after 6 April 2016

  • Your State Pension will increase every week you defer, as long as you defer for at least nine weeks.
  • Your State Pension increases by the equivalent of 1% for every nine weeks you defer.

If you reached State Pension age before 6 April 2016

  • Your State Pension will increase every week you defer, as long as you defer for at least 5 weeks.
  • Your State Pension increases by the equivalent of 1% for every 5 weeks you defer. 

You can usualy take your extra State Pension as either:

  • higher weekly payments
  • a one-off lump sum 

What about my private pension, or company pension? Do I have to take that immediately?

Possibly not, and you should consider the risks involved. Some pensions offer a guaranteed annuity rate for example, which may be connected to a specific retirement age, but the longer you leave your pension pot invested the more time it has to grow. As a result, it could give you a higher income and, in general, the level of annuity income you'll be offered should also increase the older you are. Obviously there are no guarantees though - pension pot values can go down and annuity rates are not generally guaranteed, so it doesn't always pay to delay. Dig out your documents and remind yourself what your agreed retirement date is (you'll find this on your pension statements) and then weigh up your options carefully.

Final salary schemes (defined benefit) differ from other workplace pensions as they aren't investment linked and are less likely to allow you to defer taking your benefits and continue to build up extra entitlement. If you have a defined benefit pension and are thinking of deferring your retirement, you will need to check with your employer or scheme administrator. 

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