State Pension Deferral FAQs
How much extra do I get for deferring?
Under the new State Pension, deferring earns 1% extra for every 9 weeks, roughly 5.8% for a full year. Deferring a full £241.30 weekly pension for one year adds about £14 a week · around £730 a year for the rest of your life, and the whole amount is uprated by the triple lock each year.
When does deferring break even?
You give up roughly £12,500 of pension in the deferral year to gain about £730 a year afterwards, so simple payback is around 17 years · break-even in your mid-80s. That is why, at basic-rate tax both before and after, most people do better taking it on time. The maths changes dramatically with tax bands (see below).
When does deferring actually make sense?
The strongest case: you are still working past State Pension age and paying 40% tax. Taking the pension now hands 40% of it back to HMRC; deferring converts heavily-taxed income into a bigger pension you will draw at 20% (or 0%) after stopping work. Long-lived family history and good health also strengthen the case, as does simply not needing the money yet.
Can I get a lump sum instead?
Not under the new State Pension (State Pension age reached April 2016 or later). The lump sum option belonged to the old system only. New-system deferral buys a higher weekly pension, nothing else. Deferral happens automatically if you simply do not claim.
Does deferring affect benefits?
You cannot earn deferral increases for any period you receive certain benefits including Pension Credit or Carer's Allowance, and a bigger pension later can reduce means-tested support. If Pension Credit might be part of your retirement, deferring is usually a mistake · take the pension on time.
For informational purposes only · Not financial advice · New State Pension deferral: 1% per 9 weeks (~5.8%/year), no lump sum option · Triple lock uprating not modelled (benefits both scenarios) · Deferral increases not earned while on certain benefits