Many pensioners are unaware that they can boost their annual pension income by £666 simply by deferring their claim. This option allows individuals to increase their weekly state pension payout by postponing their retirement benefits.
While delaying retirement may not be ideal for everyone, for those who can afford to wait, this strategy can offer a significant financial advantage in the long run.
Who Is Eligible to Defer Their Pension?
You can defer your state pension if:
- You were born after April 6, 1949
- You haven’t yet claimed your state pension
Currently, the State Pension age is 66 for both men and women. If you are eligible but choose not to claim immediately, your pension will increase automatically until you decide to receive payments.
How Does Deferring Your Pension Work?
The government rewards those who defer their pension with an increase in their payments.
- For every 9 weeks of deferral, your state pension increases by 1%.
- Deferring for a full year (52 weeks) results in an increase of approximately 5.8%.
- This equates to an extra £666 annually, based on the current full new State Pension rate of £221.20 per week.
| Deferral Period | Increase in Weekly Pension | Annual Gain |
|---|---|---|
| 9 weeks | 1% | £11.49 |
| 26 weeks (6 months) | 2.89% | £332.30 |
| 52 weeks (1 year) | 5.8% | £666.64 |
If you defer your pension for one year, your weekly payments will increase by £12.82 per week, resulting in an additional £666 over the year.
Is Pension Deferral the Right Choice for You?
While deferring your pension can increase your income, it may not be beneficial for everyone. Here are some factors to consider:
You should consider deferring if:
- You have other income sources and do not need immediate pension payments.
- You are in good health and expect to live longer, maximizing the increased payments over time.
- You want to increase your long-term retirement income.
You may not want to defer if:
- You need financial support immediately.
- You are in poor health and may not benefit from long-term payments.
- You prefer to access funds sooner rather than later.
Ultimately, deferring your pension is a personal decision based on your financial situation, health, and long-term plans.
How to Defer Your State Pension?
You do not need to take any action if you want to defer your pension. If you don’t claim when you reach State Pension age (66), your payments will be automatically deferred.
However, if you have already started claiming your pension, you cannot pause and restart it later. The option to defer only applies to those who have not yet claimed.
To start receiving your pension after deferral, you will need to submit a claim online via the UK Government website or contact the Pension Service.
Frequently Asked Questions
How much does my pension increase if I defer for one year?
If you defer for 12 months, your weekly pension will increase by approximately £12.82, leading to an extra £666 per year.
Do I have to inform the government if I want to defer?
No, if you do not claim your pension when you reach State Pension age, it will automatically be deferred.
Can I defer my pension after I start receiving payments?
No, once you start claiming your pension, you cannot stop and restart deferral.
Is the extra pension amount taxable?
Yes, any additional pension earned through deferral is subject to tax, depending on your overall income.
Is deferring pension a good option for everyone?
It depends on your financial needs and health. If you need immediate income, deferring may not be the best choice. However, if you can wait, it can increase your long-term income.
Will my deferred pension increase with inflation?
Yes, your pension will be adjusted according to inflation rates under the triple lock system, ensuring your purchasing power remains stable.
How do I claim my pension after deferring it?
You can claim your pension by contacting the UK Pension Service or applying online via the government’s official website.
Conclusion
Deferring your State Pension can be a smart financial move if you want to increase your retirement income. While it may not be suitable for everyone, those who can afford to delay their claims can earn an extra £666 per year.
Understanding your options and evaluating your financial and health circumstances will help you decide whether pension deferral is the right choice for you.
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Aanchal is a passionate writer with a keen interest in storytelling, content creation, and creative expression. She enjoys exploring diverse topics and crafting engaging narratives that captivate readers.
