Related
news
13 March 2026
How Games Workshop became the best performing UK share of the last two decades6 min readAuthor12 March 2026
How I invest: From trying to cover train fares to being a student of Buffett6 min readAuthor12 March 2026
Magnum’s meltdown: can Unilever’s ice cream spin-off recover from a bad start?6 min readAuthor
Shares Magazine
Ask the experts. Rachel Vahey is here to answer questions on pensions. If you’d like a question considered for a future edition send it in now.
I am approaching 65 years old and find myself enjoying work so much that I don’t want to retire just yet, I’d prefer to continue working, although I may cut my working hours.
I am a widower and receive a small income from my late wife’s pension. I have a defined benefit pension which I no longer pay into, and I now contribute regularly to a workplace defined contribution pension. I also have a couple of much smaller pensions from my early working years.
Given my situation, what are the pros and cons of deferring retirement, and how should I approach my pension options?
James
Rachel Vahey, AJ Bell Head of Public Policy, says:
In days gone by, retirement was typically seen as something you did once you reached 60 or 65, swapping the workplace one day for pottering around the garden the next. However, today, retirement is viewed as highly personal, with no universal approach. Each person’s experience of retirement is distinct; some look forward to leaving work and pursuing personal interests, while others prefer to remain engaged professionally, transition into a new career, or convert a hobby into a business.
Why there’s no standard retirement age
Working out the best age to access your pensions can be complex, as there is no standard retirement age. Instead, your decision is influenced by individual circumstances, including professional aspirations, available savings, additional sources of income, anticipated expenses, and health considerations.
Employees cannot be compelled to retire at a specific age, but it is advisable to discuss your future intentions with your employer. Some choose to put in place a timetable for gradually reducing the number of hours at the office.
The state pension age is currently 66, but this is now increasing gradually to 67 from April 2026. If you don’t need your state pension you can choose to defer it. Although you will lose payments over the deferral period, the amount you eventually receive will increase by approximately 5.8% for each year deferred, provided you defer for at least nine weeks. Whether this is the best option is a judgement call; those in poor health or with lower life expectancy may not benefit from deferral.
Private or workplace pensions are generally accessible from age 55 (rising to 57 from April 2028). There is no maximum age you must access your pension by. However, there may be tax implications if you die after age 75 without having accessed these funds, and personal contributions paid after age 75 will not receive tax relief.
Your defined benefit pension will have a set retirement age, but you should be able to take your money earlier or defer to later. It’s best checking directly with the pension scheme what adjustments will be made to your pension.
Defined contribution pensions, such as SIPPs, can typically remain invested until the holder chooses to access them, continuing to build up any contributions and potential tax-free investment growth. If you do decide to delay accessing them then this could lead to a bigger final pot value.
Keep on top of how your pensions are positioned
For workplace pensions, it is prudent to review investment strategies as you get older. Many schemes implement a glide path, gradually shifting assets from equities to lower-risk options like gilts or bonds as retirement approaches. So, if you intend to access your pension later, or you are not intending to buy an annuity with your pension pot, then you may wish to reconsider these allocations, to make sure you continue to benefit from investment growth.
Finally, you have a few different pension pots. You could decide to gradually access these individually, taking them when you need money, for example to replace lost earnings as you cut your work hours to transition into retirement. Alternatively, you could combine your defined contribution pensions under one plan before accessing them. This may make it easier to get an overall picture of your pension wealth and tax position, as well as to manage how much money you want to take from the one pension pot and when.
Rachel Vahey: Head of Public Policy
Rachel is AJ Bell's Head of Public Policy. She helps financial advisers and planners understand the changing pensions and savings environment, as well as how new legislation and regulation affects them and their clients.
Rachel...
