Staying invested or deferring

Sometimes your circumstances may mean you decide to delay converting your pension into a retirement income. It may be that you decide to continue working or that you don't need the money just yet.

You may be able to keep any Defined Contribution pension you hold invested, and even continue contributing. Should your funds grow, your pension pot could potentially provide more income. In this case you need to understand the funds you are invested in and ensure they match your appetite for risk.

Timing can play a big part in the income you will receive when you retire and you can choose to defer your state pension as well as any personal or company pension you are entitled to.

Staying invested or deferring
Advantages	Disadvantages
Your pension pot may be larger if you’re able to pay into it for longer or leave it invested for longer.	Depending on how your pension is invested, the value of your pension pot could go down as well as up, so there is no guarantee that your pension pot will be larger if you delay taking your benefits.
You may get a higher income because your pension will not have to pay out for as long.	You may get a lower income if the rates used in converting your pension pot into an income go down.
You may get a higher income if the rates used in converting your pension pot into an income improve.	The treatment of pensions has undergone major changes in recent years. There is no guarantee that the tax treatment of pensions or the choices available to you will remain the same in the future.

Can I defer my state pension? +

Yes you can. When you reach state pension age, you will receive your invitation to start taking your state pension from the Pension Service.

If you are not claiming any benefits you don’t need to do anything.

If you are receiving benefits and wish to defer then you must inform them of this decision in writing.

Why defer your company or personal pension +

Your pension pot may be larger if you’re able to pay into it for longer or leave it invested for longer. You may also benefit from a higher annuity rate because your income will not have to pay out for as long.

However, depending on how your pension is invested, the value of your pension pot could go down as well as up, so there is no guarantee that your pension pot will be larger if you delay taking your benefits. You may get a lower income if the annuity rates used in converting your pension pot into an income go down.

If you have a Defined Benefit pension you may not be allowed to defer taking this beyond your Scheme’s Normal Retirement Age. It will depend on the Scheme Rules.

Using drawdown

Securing a guaranteed income

Staying invested or deferring