Ask the Experts: "How much will I get after I defer my state pension?"

Published by Michelle Cracknell on 21 September 2017.
Last updated on 21 September 2017

Q

I deferred my state pension before the new pension rules were launched. When I start claiming it, will the 10.4% deferment increase apply to my entire pension or just the basic part?

From:
JB/Irvine

A

As you reached state pension age before 6 April 2016 – when the new state pension came into effect – you will receive the state pension on the basis of the old system.

This consists of two parts: the basic state pension and the additional pension. As you deferred starting to receive your state pension, both elements will be increased by 1% for every five weeks that you defer, adding up to 10.4% for every full year that you defer taking your pension.

Michelle Cracknell is chief executive of the Pensions Advisory Service

How to defer your pension

Four months before you hit state pension age, you can decide whether to take or defer your pension. Your pension is automatically deferred if you don’t claim it.

By deferring taking your state pension, you could increase how much you get when you do take it. If you reach state pension age on or after 6 April 2016, then the amount you receive will increase by 1% for every nine weeks you defer – or 5.8% for every full year. You will get the increase added to your payments when you eventually claim your pension.

If you reached state pension age before 6 April 2016, then your increase will be 1% for every five weeks, or 10.4% a year. You also have the choice of how you take your increase, either as a lump sum or a bump in your regular state pension payments.

It’s still possible to defer your state pension once you have started claiming it. This could be attractive to wealthier retirees who reached state pension age prior to 6 April 2016 and benefit from the higher rate.

This article was written in response to a reader’s question. If you have a financial or work/career question that has left you scratching your head ask our panel of experts who will aim to shine some light on the matter.

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