Should you wait to claim your state pension?

Thousands of people delayed claiming their state pension, according to the new figures obtained from the Department for Work and Pensions (DWP).

In the 2023-24 tax year, 41,938 people opted to defer their pension payments, down from 54,037 in the previous year.

The figures obtained through a Freedom of Information (FOI) request from Royal London showed that one in four pensioners postponed their state pension by five years or more, while 4,400 delayed it by more than a decade.

Deferring your state pension can lead to higher payments in the future, although it's not the right option for everyone. 

Here, Which? explains the rules for deferring your state pension, how this will affect your payments, and highlights the pros and cons of the decision.

How long can you defer your state pension?

The FOI revealed that the average deferral rate period was four years. Those delaying their claim by this long would receive around an extra £50 a week, according to Royal London. 

Around 590 people hadn’t claimed their state pension for 20 years or more after they were entitled to receive it. Some people waited even longer, with the average length of the 25 longest deferred claims sitting at 32 years. 

The state pension is available to those in the UK who have reached the state pension age, currently 66 years, rising to 67 from this year. However, the amount received depends on your National Insurance record. 

To qualify for any payment, you typically need at least 10 qualifying years and 35 years to receive the full amount – although some people may need more.

You can defer your UK state pension for as long as you like, as payments only begin when you claim. There's no maximum time limit, but you must defer for at least nine weeks to qualify for increased payments. How much extra you get will also depend on what state pension you claim.

It’s relatively easy to defer, as all you need to do is not claim it. You don't get it automatically when you reach the state pension age. You have to actively claim it to start receiving the monthly payments. You usually receive a letter from the Pensions Service around four months before you reach the state pension age.

Find out more: 

Deferring the basic state pension

If you reached state pension age before 6 April 2016, you have a choice between two rewards once you finally claim. You can either: 

Boost your weekly pension by 10.4% for each year you wait (minimum delay of five weeks)

Take a one-off cash lump sum plus interest (minimum delay of 12 months).

Once you apply to start your pension, the government will send a letter giving you three months to decide which option you prefer.

While the weekly boost provides a higher weekly income, the lump sum is a single payment taxed at your current income tax rate of either 20%, 40% or 45%. For example, if your full pension is £176.45 a week and you delay for one year, you would receive an extra £18.35 every week, totalling an additional £954.20 a year.

If you prefer the lump sum, you will receive all the pension money you missed plus interest, currently set at 2% above the Bank of England base rate.

When the state pension rates rise in April 2026, the basic state pension weekly rate will rise to £184.90. A one-year deferral will add £19.23 a week to your payments, amounting to an extra £1,000 a year. 

Find out more: 

Deferring the new state pension

If you reach state pension age after 6 April 2016, you'll qualify for the new state pension. The deferral terms under the new state pension are less generous and don't include a lump sum option. 

Your pension increases by 1% for every nine weeks you delay, totalling just under 5.8% for a full year. For example, on a full pension of £230.25 a week, deferring for 52 weeks adds £13.35 to your weekly payments, giving you an extra £694.20 per year. 

This extra amount is paid alongside your regular pension for as long as you claim it. 

The new state pension will rise in April 2026 to £241.30 per week. Under the new rates, a one-year deferral will be worth approximately £14 extra per week or an extra £728 per year.

Find out more: 

Pros and cons of deferring

Deferring your pension isn't the best move for everyone. Here are the pros and cons to consider:

Pros

Higher weekly payments Larger cash increases Tax efficiency Continued pension growth

Cons

Long break-even period Less money now Impact on means-tested benefitsNo benefit for some claimantsTax on enhanced payments Your state pension stops when you dieFind out more:

source https://www.which.co.uk/news/article/should-you-wait-to-claim-your-state-pension-aUmQ68k0xKOk