By Judith007

23 January 2008 12:00

I am aged 59 and will qualify for the State Retirement Pension on my next birthday. But, I want to carry on working after I’ve turned 60. Can I keep my job and still claim my pension?

What is this?

 

Yours Expert Answer

By Equity Release Expert

Yes, you can carry on working, but remember, you will have to pay tax on your whole income, including the pension.

If you don’t need the income from your pension, you may prefer to defer your claim to State Pension.

When you do defer you can choose to either take the money you would have claimed as a lump sum or ask for this amount added to your pension each week when you do eventually claim it.

As a rough guide, you should get an extra 10.4 per cent of pension if you defer claiming it for one year and don’t claim another earnings replacement benefit such as Bereavement Allowance or Carer’s Allowance. 

If you opt instead for the lump sum payment, it is taxable and you will have to defer your pension for at least 12 consecutive months.

The lump sum is made up of the pension you would have received during that time, plus interest. The rate of interest is about two per cent above the Bank of England’s base rate. You will be paid your normal State Retirement Pension from when you claim your lump sum.

You don’t have to choose between the lump sum and extra pension now though. But you must decide once you start to claim your pension. You can do this whenever you want, but you can defer it only once. So you could start claiming your pension as soon as you reach 60, but then change your mind and cancel your claim. You would then have the same options as previously mentioned.

Rules introduced in April 2005 mean that there is now no limit to how long you can defer your pension.

Further information
Direct Gov