Reaching State Pension age doesn’t mean you have to start taking your pension straight away. In the UK, you have the option to delay (defer) your State Pension, which can increase the amount you receive later.
State pension deferral simply means choosing not to claim your pension when you become eligible. In return, your payments can increase over time or be taken as a lump sum, depending on your circumstances.
Do I have to claim my state pension at retirement age?
It is not necessary to claim the state pension as soon as the state pension age is reached.
By not making a claim, deferring, for a period of at least 9 weeks the pension received will be increased by 1% for each nine weeks deferred which is just under 5.8% a week.
State pension deferral example
Let’s look at someone who receives less than the full state pension (£164.35 a week)
This means your state pension will be £8,546.20 a year.
By deferring for a year, you will receive an additional £493 (just under 5.8% of £8,546.20).
The same pension would increase from £164.35 a week to £217.55 a week if it were deferred for five years.
After you claim, the extra amount you receive because of the deferral will usually increase each year.
While the pension is being deferred by £164.35, the loss for the year will be £8,546.20. So it will be necessary to live for a good few years before the loss of the pension income is recouped from the additional amounts.
Reasons why some people defer state pension
They already have adequate retirement income and are happy for the entitlement to grow.
There are tax planning reasons (for example a capital gain may be envisaged in the first year the pension is due to be received).
What is the state pension entitlement?
A state pension forecast can be requested by visiting https://www.gov.uk/contact-pension-service , or by calling the forecasting team on 0800 731 0175 (phone 0800 731 0176).
State pension deferral contact details
Call: 0800 731 7898. These calls are free from BT landlines. Calls from mobile phones may be charged at premium rates. A request may be made for the operator to call back.
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