This is probably a question that has been on the minds of many people for several years! Of course, we can not tell you when you should retire (which depends on your personal circumstances). However, we can tell you when you can start receiving your state and personal pensions.
One thing to note before we continue: a lot of the details that are included in this guide are based on present and planned changes to the age at which you can receive your pension. Therefore, you should keep track of the developments to ensure that you do not be required to work longer than you were expecting to!
If you are a man, you can begin to receive your State Pension from the age of 65.
If you are a woman, on the other hand, the State Pension age has started to increase gradually from 60 to 65.
You can easily calculate your State Pension age here.
By October 2020, the State Pension age for both women and men will gradually be increased to 66 depending on the exact date of your birth.
Between 2026 and 2028, the State Pension Age will rise from 66 to 67.
RELATED: Understanding State Pensions
The Government has also suggested increasing the age at which you can claim your State Pension to 68 between 2037 and 2039. The earlier timetable for this was 2046.
You do not have to claim your State Pension as soon as you become eligible to take it. If you decide to delay when you take your State Pension, you could be able to receive an increased weekly pension. The pension would grow by 1% for every nine weeks that you defer receiving it. So, if you deferred for an entire year, you would increase your state pension by almost 5.8%.
There is currently no maximum age by which you need to take an income from your pension pot (previously, it was 75). However, if you continue to pay into your pension after the age of 75, you will no longer receive any tax relief on your contributions. You can take your personal pension regardless of whether you are still working and/or are receiving the State Pension.
Even though you can currently take your pension at any point from the age of 55, you should remember that your pension provider may manage your pension by considering when they expect you to retire. Usually, sometimes up to a decade before your retirement, your pension provider will transfer your pot from riskier investments to those that are safer in order to protect the gains that you will have made over your lifetime. This is sometimes dubbed “lifestyling” which applies to all stakeholder pensions and some personal pensions.
The Government has announced that it plans to raise the minimum age at which you can have access to personal pensions to 57 in 2028 so that it is always ten years earlier than the period when the state pension can be paid.
If you are not planning to retire until later, it may be a good idea to inform your pension provider so that you can continue to benefit from higher potential returns for a longer period (although of course, this comes with the higher risk of your pension fund dropping value, if an investment performs poorly).
When do I have to take an annuity?
There is no necessity to purchase an annuity at any time. You can opt not to purchase an annuity and can keep your pension invested, withdrawing a part of it every year as an income instead, or just living off the growth in investment.
If you still have questions in mind, you may look at our Complete Pensions FAQ.