The Department for Work and Pensions (DWP) has confirmed a significant increase to state pension payments for retirees who choose to defer their claims. By deferring the new State Pension, individuals can receive an extra 5.8% added to their regular payments for each full year they delay claiming.
How Deferring Works
This option applies to those who reach State Pension age after 5 April 2016. For every nine weeks of deferral, you receive an additional 1% of your pension amount, added to your regular payments for the rest of your life. For the tax year 2026/27, this equates to an extra £2.41 per week for those entitled to the full new State Pension.
If you defer for a full year, you get just under 5.8% extra, which amounts to an additional £13.94 per week. This means your weekly State Pension would be £255.24 in 2026/27, resulting in an annual increase of £724.88.
Expert Insights
Martin Lewis, the BBC and ITV financial expert, commented: "Defer your state pension, and the maths works out that if you live longer than typical life expectancy, you'll gain; if you live less, you'll lose. Live a typical lifespan and it'll be pretty neutral." He added that those in poor health should not consider it, while those with a history of family longevity could benefit. Lewis also highlighted tax considerations: if you have a decent income now but will pay tax at a lower rate later, deferring can be very worthwhile.
Money Saving Expert noted: "On current figures, a one year deferral would net you an extra £728 a year on your state pension, for life. Yet, do note that to get this, you'll have given up £12,547 in state pension that you could have claimed in the first year."
Alternatively, you may be able to receive a lump sum instead of or in addition to the extra regular payments. This decision should be carefully considered based on individual health, life expectancy, and tax circumstances.
