Contact the State Pension claim line if you need help. You might be able to increase the amount you get if you delay your pension.
For advice about increasing your workplace or private pension, speak to a financial adviser. To help us improve GOV. It will take only 2 minutes to fill in. Cookies on GOV. UK We use some essential cookies to make this website work. Accept additional cookies Reject additional cookies View cookies. Hide this message. Part of Plan your retirement income: step by step. Delay defer your State Pension. What you'll get The amount of extra State Pension you could get depends on when you reach State Pension age.
If you reach State Pension age on or after 6 April Your State Pension will increase every week you defer, as long as you defer for at least 9 weeks. The extra amount is paid with your regular State Pension payment.
This will include interest of 2 per cent above the Bank of England base rate — currently 0. Even if the pension is deferred for several years the lump sum, which is taxable as income, will not push the pensioner into a higher rate of tax. A basic rate taxpayer will pay this rate even if the lump sum takes their income into the higher rate tax bracket.
People qualifying for the state pension after April get a lower rate of annual increase for deferment of 5. If you reached state pension age before April 6 , deferring your state pension for a year only really pays off after around nine or 10 years of receiving your pension. If you reached state pension age after April 6 , the payback period is around 17 years. This is a significant risk. The DWP says that the calculations are made more complex because the extra pension you earn from deferring is uprated each April in a different way from the rest of the state pension.
It rises in line with earnings, prices, or 2. But the extra pension earned by deferring is raised only in line with prices using the CPI measure of inflation. In April , for example, the main pension rose by 2. Statistically speaking, the risk of not getting your money back and more is lowest for those living in London and the Southeast, and the highest in Glasgow.
In , life expectancy at age 65 was highest for men in Harrow, where they could expect to live for a further For women at age 65, life expectancy was highest in Camden at Currently, the DWP says about 1.
This is not surprising as 1. The DWP does not have figures for the number of people who are currently deferring their state pension to build a higher pension entitlement later in life.
You should only consider deferring the state pension if you are in good health, and do not need the money from the state pension now. It is most attractive for people who are still working or who have retirement income from a company or private pension which means the state pension would take them into a higher tax band. One Financial Times reader, who first drew her state pension before April , was horrified that her income from pensions and part-time employment put her into the higher tax bracket resulting in a big tax bill at the end of the year.
She stopped her state pension for three years to increase her pension when she finally retired. She is now paying basic rate income tax. My husband deferred his state pension and wants it as a lump sum now - but got a shock 'no': Is there a way to get the cash?
My dad deferred his pension and died before taking it, so why can't we claim? I am 70 and have deferred my state pension, but people tell me this is 'silly' - are they right? I don't need my state pension so can I put payments on hold - and will I benefit from doing this?
While it's tricky to predict exactly how much someone will benefit from deferring their state pension, Mr Webb thinks some are more likely to benefit than others. He told This is Money: 'Women will tend to benefit more than men because, on average, they live longer. Average life expectancy at age 66 is 19 years for a man and 21 years for a woman, according to the Office for National Statistics.
Mr Webb added: 'People in good health tend to do well out of the deal, again because they get the increased pension for longer. Mr Webb said people still working are also among those most likely to benefit from deferring their state pension payments. By deferring they avoid the risk of, for example, paying higher rate tax on their pension.
As touched on before, if you are already in poor health, then deferring any state pension payments may not be such a good idea.
Anyone on means-tested benefits also needs to be careful before taking the plunge and deferring any state pension payments. Mr Webb said: 'The reward of a "higher" state pension may simply mean less pension credit or other benefits. So, they do without their pension for a year but then get little or no reward.
If you reach state pension age on or after 6 April , and if you are single or widowed, you should also bear in mind that if you were to die during a period of deferral your heirs may not be able to access the money you had deferred taking aside from a few months' income. If you start taking state pension payments once you are eligible, it is still possible to, at some point in the future, defer the payments.
But, you can only do this once over the course of your retirement, Mr Webb said previously. Plus, the terms on which you can do this depend on whether you reach state pension age before or after 6 April In terms of when someone should stop deferring the receipt of their state pension, there's no clear cut answer. Pensions expert Steve Webb last year advised one This is Money reader: 'There is no "right answer" as to the best date to stop deferring, but I think most people would want to make sure they got the benefit of their state pension for a good period of time while they were still fit and able enough to enjoy it.
Knowing how best to deal with a state pension can be tricky, so if in doubt, get in touch with a financial adviser you can trust to get their thoughts. And, of course, always do your own research before taking the plunge. Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use.
We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence. The views expressed in the contents above are those of our users and do not necessarily reflect the views of MailOnline.
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