State pensioners are having their Department for Work and Pensions (DWP) payments paused under a little-known rule known as deferral. A retiree reached out to pension expert Rachel Vahey from AJ Bell for advice on this matter.
Reader's Query: Can I Defer My State Pension Again?
The reader, aged 73, explained: "I became eligible for state pension at 65 but chose not to take it because I was in full-time employment and paying higher rate income tax. I retired at 68 and started receiving my state pension, which with my work pension placed me in a lower tax bracket. However, at 70 I began working part-time, and now I am effectively paying higher rate tax on a minimum wage. Can I defer my state pension again temporarily?"
Expert Explanation: Deferral Rules
Rachel Vahey clarified: "Deferring a state pension can mean two things: delaying taking it for the first time, or pausing it once you are already claiming it. Both actions can only be done once. So in your case, you delayed initially and then paused it, but you cannot pause it again after restarting."
Financial Considerations
Martin Lewis, BBC and ITV star, commented: "Deferring your state pension can be beneficial if you live longer than average life expectancy, but detrimental if you live less. For those in poor health, it is not worth considering. For those with good health and family longevity, deferring could be a winner. Otherwise, the main issue is tax: if you have a high income now but will pay lower tax later, deferring can be worthwhile."
Rachel added: "There is no time limit on how long you can delay or pause the state pension. However, there are financial consequences, so it is important to consider personal circumstances carefully."
