Delaying Your Annuity

Pensioners are no longer obligated to buy a pension annuity by their 75th birthday, and neither is it mandatory to start drawing retirement income on the date that was originally chosen for retirement. You can delay taking your retirement income depending on the rules or the contract terms of your specific pension scheme.

You can also delay taking your state pension, for example, if you want to continue working because you haven’t made up your qualifying 35 years to receive a full state pension. Or if you do not need the income from the state pension, if you delay it for a minimum of 9 weeks you may receive extra money, it works out just under 5.8% per annum by delaying it a year. Delaying your state pension will not prevent you from receiving your retirement income and any tax-free cash from your company/private pensions.

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But there is little to be gained from a deferred annuity. In fact, you may end up losing out. For starters, you could end up being taxed if you die or take a lump sum due to severe ill health before you secure your annuity. And delaying your annuity in the hope of securing a better deal at a later date could also be counterproductive – you may not live to see benefits. Experts recommend buying an annuity when it is needed rather than delaying it.