People over 50 should consider their retirement options says Ritchie

Social Development Minister Margaret Ritchie today encouraged people in their 50s to consider their retirement plans as they approach State Pension age.

Minister Ritchie said: “One of the good-news stories of the recent decades is the fact that we are living longer and healthier lives. It is important that we all look ahead and plan as best we can for the future.

“Working beyond State Pension age is not suitable for everyone; however, there can be real financial benefits for those who do. People should explore their options now to see what is right for them as they plan for retirement.”

There are five key facts that people should be aware of:

1. You don’t pay National Insurance contributions when you work past State Pension age which will boost your take home pay.
2. Your tax free allowance increases after 65, so you pay less tax on what you earn.
3. Putting off claiming your State Pension means you could get a larger weekly amount when you do claim it.
4. If you defer for more than a year you can choose to take a cash lump sum with interest instead.
5. You can work and claim your State Pension at the same time.

To find out more about State Pension options visit www.nidirect.gov.uk

Notes to editors:

1. A person’s liability to pay National Insurance contributions ceases once they reach State Pension age. This means that those who continue to work past State Pension age will see a rise in their take home income.

2. Those who defer claiming the State Pension may, when they claim their pension, receive either of the following:

• Extra State Pension – State Pension entitlement can be increased by one per cent for every five weeks of deferment – equivalent to an extra 10.4% if the claim is deferred for a full year. The extra State Pension is payable for life and increased each year with the rest of the State Pension; or
• A lump-sum payment – A taxable, one-off payment based on the amount of State Pension the individual would have received, plus interest added each week and compounded. Individuals must defer claiming for at least 12 consecutive months and receive their State Pension at the normal rate when they claim.

3. The income tax personal allowance increases once an individual reaches age 65 (for 2009/10 £9,490) meaning they are liable to pay less tax.

4. Further information about State Pension deferral can be found online at www.nidirect.gov.uk

5. Media enquiries to DSD Information Office on 028 9082 9079. Out of hours, please contact the Duty Press Office via pager number 07699 715440 and you call will be returned.