Take your pension later than planned: late retirement explained

Most pensions are designed to pay out at either: 

• your normal pension age (NPA) – when your provider expects you to retire 
• a selected retirement date (SRD) – if you’ve told your pension provider a different date. 

The NPA varies between providers but can be between age 55 and your State Pension age. You can find your NPA in your scheme documents or by asking your pension provider.

You can quickly check your State Pension age Opens in a new window on GOV.UK. This is the earliest you can claim the State Pension. 

If your pension is designed to pay out earlier than you’d like, you can usually delay your claim. 

This might mean: 

• your pension money will last longer or give you a higher income 
• you’ll pay less Income Tax if you’re still earning. 

You can also continue to benefit from tax relief on your pension contributions up until age 75. 

What happens when you put off your pension depends on the type you have. You can find out your pension type using our tool or ask your pension provider. 

If you have a defined contribution pension, the amount it will pay you depends on: 

• how much is paid in 
• how well your invested money performs 
• the charges that are taken off 
• how and when you choose to take your money. 

If you delay your claim past your scheme’s expected retirement date, your provider will continue managing it for you. This can mean: 

• your pension has longer to stay invested and potentially grow 
• you can often convert your pension into a higher guaranteed income as annuity rates typically increase the older you are, as it likely won’t pay out for as long.   

If you have a defined benefit pension, you’ll get a guaranteed monthly income based on: 

• your salary  
• how long you worked for your employer.  

If you decide to take late retirement, your scheme might: 

• increase the pension income you’ll get, as it’s likely to be paid for a shorter time, or 
• pay you a lump-sum of the regular payments that you did not claim. 

Your provider will be able to explain the rules that apply to you. 

You can start claiming your State Pension when you reach your State Pension ageOpens in a new window

But if you wait, your weekly State Pension amount will increase for each week you don’t claim – as long as you delay by at least: 

• nine weeks or 
• five weeks if your reached State Pension age before 6 April 2016. 

You can then claim your State Pension when you’re ready. Just remember, it will be paid over a shorter period so you might not gain more overall if you have a short life expectancy.  

Taking your pension later can mean you get a higher retirement income and pay less tax if you still have other earnings. 

But there are some potential downsides to consider too.

Some pension schemes have benefits that only pay out when you reach a certain age. This means you might lose out if you take money after this happens.

Ask your pension provider if your scheme has any special features and when you qualify for them. For example, your scheme might:

• pay an extra payment if you take your pension on a certain date, often called a with-profits bonus
• let you convert your pension into a higher guaranteed income than you can get elsewhere, called guaranteed annuity rates
• only pay certain death benefits if you’ve started taking an income from it.

You might also need to pay a charge to change your planned retirement date, so always check.

Most pension schemes have a maximum age you must start taking your money by – often age 75. 

If you delay past your scheme’s normal pension age, it’s worth checking if you can claim it at any time or if you’d need to wait until a certain date. 

If you have a defined contribution pension, your provider will usually move all your invested pension money to more stable investments the closer you get to your scheme’s normal pension age. 

If you want to take your pension later than this, you might miss out on investment growth by leaving your money in your provider’s default fund.  For more information, see our guide How to choose your own pension investment options.

Pension income is counted when calculating how much Income Tax you’ll pay. If delaying your pension increases the income you’ll get, this might push you into a higher tax band when you start claiming it. 

You can see the Income Tax bandsOpens in a new window and Scottish Income Tax bandsOpens in a new window on GOV.UK.  

A higher income can also affect any benefits you’re entitled to claim. You can use: 

• our Benefits calculator to check what you’re entitled to and how it might change if your income or savings increased 
• Advicelocal to find free and confidential benefits adviceOpens in a new window

If you have money left invested in a defined contribution pension and you die before age 75, your pension can usually be inherited tax-free – as long as: 

• the money is paid to your nominated beneficiaries within two years of your pension provider being aware of your death 
• the total amount inherited from all your pensions is not higher than the lump sum and death benefit allowance (LSDBA). 

For more information, including the rules on Inheritance Tax, see our guide What happens to my pension when I die?

Even if you’re certain you won’t need to claim your pension at a certain age, it’s a good idea to plan when you might need it many years before – and have a backup plan in case your situation changes. 

If you have a defined benefit pension, you usually have the option to take up to 25% as a tax-free lump sum and the rest will be regular taxable income.  

If you have a defined contribution pension, you can choose to take up to 25% of your pension as a tax-free lump sum and:   

• leave the rest invested so you can take taxable income as and when you need it, called pension drawdown  
• get a taxable guaranteed income by buying an annuity.  

Alternatively, you could take your entire pension as one or more taxable lump sums, with up to 25% of each amount paid tax-free.   

It could be worth considering if you’ll be better off taking your pension before you've fully retired. For example, you could use your pension to allow you to reduce your hours. 

For help deciding, we offer free and impartial guidance on your pension options

If you're sure taking your pension later than planned is right for you, there are things you need to do.

Contact your pension provider so they know when you plan to start taking your pension.  

Always ask them: 

• if there are any fees or penalties to delay your expected retirement age 
• if you’ll lose any benefits by taking your pension later 
• if you can take your pension at any point 
• the maximum age you must claim your pension by. 

If you have a defined contribution pension, also find out how your pension is currently invested and if you might be better off: 

• moving to another of your provider’s ready-made funds 
• choosing your own pension investment options. 

If you cannot delay your claim to the age you’d like with your current provider, you could consider transferring your pension. But there’s always a risk you’ll be worse off moving your pension, so make sure to check what benefits or features you might be giving up.  

For more information, see our guide Should I transfer or combine my pensions?

There are many ways you can increase your retirement income, including:    

• paying more into your pension – your employer might also match your contributions   
• checking you’re getting all the tax relief you’re eligible for   
• making sure you’re on track for the maximum State Pension   
• delaying your retirement date. 

For more information, see our guide Ways to boost your pension.

If you have a defined contribution pension, its value can rise and fall until you take your money. 

Depending on how well it’s performing, you might want to consider changing:  

• when you plan to start taking money  
• how your pension is invested.  

It’s also worth comparing pension providers at least once a year, to see if you might be better off transferring your pension elsewhere. 

When you’re ready and able to claim your pension, or when you reach the maximum age you can claim it, contact your provider to tell them how to start paying you.

You can contact our pension specialists for free help and guidance – it does not matter what type of pension you have or how old you are.