Hundreds of thousands of UK pensioners have a straightforward method to significantly boost their state pension income, according to official guidance. Individuals who have reached the state pension age of 66 can choose to delay claiming their payments, leading to a higher weekly amount when they eventually start receiving them.
How Deferring Your State Pension Works
The process, known as deferring, involves choosing not to start your Department for Work and Pensions (DWP) state pension payments as soon as you become eligible. For those on the new state pension, this strategy results in a 1% increase in their weekly payment for every nine weeks they defer.
Official money guidance service Money Helper explains the trade-off: "Delaying or stopping your State Pension means you'll get more when you do claim, but you'll receive it over a shorter period." They advise that individuals must consider their life expectancy and that of their partner to determine if the overall gain will be beneficial.
Automatic Deferral and Lump Sum Options
One of the simplest aspects of this process is that it often requires no action. Once you reach state pension age and do not make a claim, your pension is automatically deferred. Furthermore, even if you have begun receiving payments, you can choose to pause them, securing the same potential for increased future income.
The DWP also offers an alternative for shorter deferral periods. If you postpone your state pension for less than 12 months, you can opt to receive the missed payments as a one-off lump sum, known as a backdated payment, instead of enhancing your ongoing weekly amount.
Important Considerations for Your Estate
It is crucial to understand that the State Pension generally stops upon the recipient's death, unless a husband, wife, or civil partner is eligible to inherit part of it. The GOV.UK website provides a State Pension and your partner tool to help clarify individual circumstances and inheritance options.
This financial strategy presents a valuable opportunity for those who do not need immediate access to their state pension funds, allowing them to build a more substantial income for later in retirement. Experts recommend carefully weighing personal health, financial needs, and longevity before deciding to defer.
