Retiring later or delaying taking your pension pot

Most workplace pension schemes set an age that people are expected to start taking their benefits. This is referred to as normal retirement age. It’s often 60 or 65.

If you have a personal pension, you usually choose the date when you think you’ll want to start taking benefits when you set it up. This is usually referred to as your selected retirement date.

You don’t have to access your pension when you reach this age. You could decide to leave it untouched and take late retirement.

If you already have enough income to live on, you might be able to delay taking income from your pension. For example, either because you’re carrying on working or have other income from savings or investments.

Different rules apply depending on whether your pension is a defined contribution or a defined benefit scheme.

Find out more about these pensions in our guides, Defined contribution schemes and Defined benefit (or final salary) schemes explained.

If you have a defined contribution pension you will have built up a pension pot to pay you a retirement income based on how much you and/or your employer contribute and how much this grows.

Also known as 'money purchase' schemes. You may have built up one or more pots personally or through the workplace.

There’s no hurry to start taking money from your pension if you don’t need to.

But it's a good idea to check whether your policy has any special features that mean restrictions apply. You should also check if you might lose any income guarantees or investment bonuses if you take it later.

Your pension pot remains invested until you need it – potentially providing more income once you start taking money out.

If you want to build up your pension pot more, you can continue to get tax relief on:

• pension savings of up to £60,000 a year, or
• 100% of your earnings if you earn less than £60,000, until age 75.

Make sure you check with your provider whether there are any restrictions or charges for changing your retirement date. And the process and deadline for telling them.

Also, check that you won’t lose any guarantees. For example, a guaranteed annuity rate (GAR), by delaying your retirement date.

The value of pension pots can rise or fall. If you do decide to delay taking money from your pension, remember to review where your pot is invested. This will make sure it’s in-keeping with your change of retirement date.

The longer you delay, the higher your potential retirement income might be. But this could affect your future tax bill and your entitlement to state benefits. 

Instead of delaying taking money from your pension, you might be able to retire gradually. You could do this by reducing your working hours and taking an income from part of your pension. 

Find out more about the effect of income and savings on state benefits in our guide Benefits in retirement.

If you have a defined benefit pension this will pay you a retirement income based on your salary and how long you have worked for your employer. 

Defined benefit pensions include 'final salary' and 'career average' pension schemes. Generally, they are now only available from public sector or older workplace pension schemes.

You might be able to leave your benefits in the scheme after normal retirement age and delay taking them.

But be aware that defined benefit schemes might have a maximum age you must take your benefits by. This is usually 75.

If you decide to take late retirement, your scheme might increase the pension income you get as it will be paid for a shorter time.

Some schemes will make back-payments of the amount you would have received between your normal retirement date and the later one. But be aware that some providers might not do this.

It’s best to check with the administrators – as there might not be any benefit in deferring payments.

Do you have other income when your defined benefit pension is due to start paying you an income, and you don’t need the extra income yet? Then delaying it could save you tax – especially if it pushes you into a higher tax bracket.

Delaying taking the income does mean you’ll potentially miss out on income over the period though. So it’s worth considering how long it might take to pay back the income you haven’t received over the period.

Do you want to delay taking an income from your pension, but your scheme or provider doesn’t have this option? Then it might be possible to move your pension to another provider who does allow this. 

Remember to get guidance or advice, and to shop around before moving your pension.  

Find out more in our guides Transferring your defined contribution pensions and Transferring your defined benefit pensions.

Since 6 April 2024, the lump sum and death benefit allowance (LSDBA) limits the total amount of money you can take tax-free while alive and on death to £1,073,100, for most people. This has replaced the lifetime allowance (LTA).

When a person dies, any money left in the pension plan will be tested against the LSDBA.

When you reach your State Pension age, you don’t have to claim your State Pension straight away. Your State Pension age is the earliest age you can start receiving your State Pension. Check your State Pension ageOpens in a new window on the GOV.UK website.

You can delay (defer) claiming it. In return, when you do decide to take your State Pension – if you've put off claiming it for at least nine weeks – you could increase the payments you get when you decide to claim it.

Be aware that different terms apply, depending on when you reach your State Pension age.

If you reached State Pension age on or after 6 April 2016, your State Pension will increase by 1% for every nine weeks you put off claiming. This works out at just under 5.8% for every full year you put off claiming.

The new State Pension, and any extra State Pension, are both taxable income.

If you deferred your State Pension before 6 April 2016, you will continue to be treated under the old rules. This means you’ll still be entitled to take a lump sum or increased pension.