Readers’ forum: Recycling state pension into the private pension

My client is a higher rate taxpayer aged 65 who is in full-time employment and is likely to remain so for a few more years. He will be entitled to his state pension when he reaches the age of 66 later this year.

One option he is considering is deferral of his state pension until he either ceases employment or reduces his working hours down to a level at which he pays only basic rate tax. He has asked me whether it would be better for him to draw the pension when he reaches 66 but then contribute the full amount of the state pension into his private pension (subject to the annual allowance and total pension fund limit).

He would pay higher rate tax on the pension but receive higher rate relief on the contributions to the private pension and so the two amounts would cancel each other out....