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[Finance] Should Pensioners Pay Tax?



southstandandy

WEST STAND ANDY
Jul 9, 2003
5,825
Being of pensionable age I'd like to say No. But in all reality I personally think it's only fair that I do. Yes, I worked 85 hours a week for 20 years to buy my house and paid a shed load of tax then, but it has at least now given me a comfortable retirement. If my taxes help support our essential services then I have to say Yes.
 






Elbow750

Well-known member
Jun 21, 2020
478
Not taking it is basically taking a punt on your life expectancy isn’t it ? May be better to take it and invest elsewhere if not needed.
Last time I heard of anyone deferring taking the state pension, their returns were quite good. Ok you'll be drawing it for a shorter time, and if you die early then you've lost out, but as others have said if it stops you going into a 40% tax then could be worth it.

Likewise if you are short of years, then a one off class 2 voluntary NI contribution of £824 buys you a year's extra contributions, which increases your pension by about £5.25 week. The £824 pays itself back in about 3 years, after which you'll get £5.25 a week (£275 a year) extra for the rest of your life. This rises each April with the rest of the state pension. I'm going to be a couple of years NIC short of my maximum state pension so will be looking to make these upo with voluntary contributions.
 


dazzer6666

Well-known member
NSC Patron
Mar 27, 2013
53,586
Burgess Hill
Last time I heard of anyone deferring taking the state pension, their returns were quite good. Ok you'll be drawing it for a shorter time, and if you die early then you've lost out, but as others have said if it stops you going into a 40% tax then could be worth it.

Likewise if you are short of years, then a one off class 2 voluntary NI contribution of £824 buys you a year's extra contributions, which increases your pension by about £5.25 week. The £824 pays itself back in about 3 years, after which you'll get £5.25 a week (£275 a year) extra for the rest of your life. This rises each April with the rest of the state pension. I'm going to be a couple of years NIC short of my maximum state pension so will be looking to make these upo with voluntary contributions.
Yep…..like I said, a punt on life expectancy basically. Any advisor will take into account current age and health vs expected age attainment.

Agree re missing years (see post directly above yours). Mrs D was missing about 12 years (having not gone back to work after kids grew up), so we’ve made those up. All things being equal it should pay off.
 






Tim Over Whelmed

Well-known member
NSC Patron
Jul 24, 2007
10,419
Arundel
I think I know why as when I enquired about my forces pension,( because back in the day , boys time didn't count) I was told my State Pension would be slightly enhanced because of that.
I get a Forces pension but didn't join until I was 19 cheers mate
 


sparkie

Well-known member
Jul 17, 2003
12,833
Hove
….or just pay it up. Cost is around £800 per missing year.
Better than that for me.

1 year is covered if I work until April this year.

Another year needs £32 paid to make it up to the full amount.

The 3rd year needs £720 to make it up.

However, as I intend to work at least until April 2025, there seems little point in paying up either year ?
 
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Pavilionaire

Well-known member
Jul 7, 2003
30,957
There are plenty of pensioners working, or receiving rental income, significant investment income and they don't pay National Insurance so - yes - they should pay tax.

Many people who work beyond state pension age choose to defer taking their state pension. A number of those people will now be receiving state pension at or above the £12,570 tax-free Personal Allowance, and that number will increase as the PA has been frozen until 2026.
 




nicko31

Well-known member
Jan 7, 2010
17,990
Gods country fortnightly
On the subject of pension contributions the government should cut the tax relief on personal pensions to 15% but make it tax free on drawing your pension (like Australia)

This government have bankrupted the country and the chancellor needs the money NOW
 


Nicks

Well-known member
On the subject of pension contributions the government should cut the tax relief on personal pensions to 15% but make it tax free on drawing your pension (like Australia)

This government have bankrupted the country and the chancellor needs the money NOW
Which government sold all the gold at rock bottom prices therefore causing the retirement age to rise ?
That's where the problems started.
 






Weststander

Well-known member
NSC Patron
Aug 25, 2011
66,218
Withdean area
Which government sold all the gold at rock bottom prices therefore causing the retirement age to rise ?
That's where the problems started.
State pension ages have been raised across the economically sensible world for some time now, it’s a must with people living far longer now. France is the last bastion of early retirement on state pensions, Macron is now tackling that, hence the mass strikes.
 




GT49er

Well-known member
NSC Patron
Feb 1, 2009
47,615
Gloucester
Last time I heard of anyone deferring taking the state pension, their returns were quite good. Ok you'll be drawing it for a shorter time, and if you die early then you've lost out, but as others have said if it stops you going into a 40% tax then could be worth it.

Likewise if you are short of years, then a one off class 2 voluntary NI contribution of £824 buys you a year's extra contributions, which increases your pension by about £5.25 week. The £824 pays itself back in about 3 years, after which you'll get £5.25 a week (£275 a year) extra for the rest of your life. This rises each April with the rest of the state pension. I'm going to be a couple of years NIC short of my maximum state pension so will be looking to make these upo with voluntary contributions.
If you've got all the years, you can increase the OAP (2% a year IIRC) by deferring - I did, and got a bit extra (not as much as I intended because I fell out with my employer and told them to stuff it and walked out earlier than I planned!)
 




NooBHA

Well-known member
Jan 13, 2015
8,588
Absolutely

Of course they should pay tax if they break tax thresholds. There are thousands of Pensioners sitting in receipt of Final Salary Pension Annuities of millions of £s per annum. Mostly people who were CEOs of multi national companies who ensured that the Pension Funds they were paying into were " Final Salary Pensions ". Meaning that the level of pension they received was based on a pre agreed favourable percentage of the multi million pound salary they were earning in the Fiscal Year of their retirement. Some of them up to 80% of that salary. To not tax those people with those levels of income would be criminal. Especially given that they often engineer themselves large bonuses in the years leading up to when they retired
 


dazzer6666

Well-known member
NSC Patron
Mar 27, 2013
53,586
Burgess Hill
Absolutely

Of course they should pay tax if they break tax thresholds. There are thousands of Pensioners sitting in receipt of Final Salary Pension Annuities of millions of £s per annum. Mostly people who were CEOs of multi national companies who ensured that the Pension Funds they were paying into were " Final Salary Pensions ". Meaning that the level of pension they received was based on a pre agreed favourable percentage of the multi million pound salary they were earning in the Fiscal Year of their retirement. Some of them up to 80% of that salary. To not tax those people with those levels of income would be criminal. Especially given that they often engineer themselves large bonuses in the years leading up to when they retired
Definitely. Also, worth noting final salary pensions are only multiplied at 20x to determine lifetime allowance thresholds/charges, so those CEOs and others are gaining there too……..
 


Herr Tubthumper

Well-known member
NSC Patron
Jul 11, 2003
60,927
The Fatherland
Which government sold all the gold at rock bottom prices therefore causing the retirement age to rise ?
That's where the problems started.
Dear oh dear. Do you truly believe this?
 






Super Steve Earle

Well-known member
Feb 23, 2009
8,597
North of Brighton
Which government sold all the gold at rock bottom prices therefore causing the retirement age to rise ?
That's where the problems started.
Ooh, I know that one, at least the bit about selling the gold. Oh, better not say on NSC,!
 




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