The Department for Work and Pensions (DWP) is encouraging state pensioners to make a "personal choice" that could result in an extra £728 a year on their state pension for life. This option involves deferring the state pension, a decision that depends on individual circumstances.
Deferring State Pension: A Personal Decision
In the House of Commons, Labour MP Andrew Lewin questioned Pensions Minister Torsten Bell about the average length of time people defer their state pension. Minister Bell responded, "The department does not know that a person has deferred until they submit a claim for their State Pension." He added, "Deferring entitlement to the State Pension is a personal choice based on an individual's circumstances. It is the claimant's responsibility to decide when to claim, including whether to defer it."
Factors to Consider
Bell emphasized that whether deferring is the right decision depends on various factors, including the length of deferral, employment status, dependents, tax position before and after claiming, and entitlement to other benefits. He noted, "Deferring can affect the amount and timing of payment, and this is a decision only the claimant can make."
How Much Extra Can You Get?
According to Money Saving Expert, for every nine weeks you defer, you receive an extra 1 percent, approximately £2.41 per week. Deferring for a full year yields a 5.8 percent increase, equating to £13.99 per week, as highlighted by Martin Lewis. On current figures, a one-year deferral could net you an extra £728 annually for life.
However, to achieve this, you must forgo £12,547 in state pension that you could have claimed in the first year. In general, if you defer for any period, you would need to live for around 20 years after claiming to break even.
Guidance for Claimants
Individuals are directed to deferral information on the Government website when invited to claim their State Pension. An invitation to claim letter is issued up to four months before reaching State Pension age. Ultimately, the decision to defer is a personal one, and claimants should carefully assess their own circumstances before making a choice.
