State pensioners are being advised to make a certain check before claiming their money. There’s an option to defer payments and start claiming at a later date, which could boost the amount received.
If you reached State Pension age on or after April 6, 2016, your payments will increase by 1% for every nine weeks you defer. Meanwhile, if you reached State Pension age before this date, your payments increase by 1% for every five weeks you defer. However, deferring can carry some financial risks and may not suit everyone’s specific circumstances. Experts point out that if you choose to increase your payments, you may need to consider whether you’ll live long enough to “break even” on the sum you deferred.
As reported by Cambridgeshire Live, Torsten Bell, pensions minister, was asked by Labour MP Andrew Lewin about the average length of time people defer their state pension. He replied: “The department does not know that a person has deferred until they submit a claim for their State Pension.”
He explained how it is very hard to establish how many people have deferred their state pension. It’s also nearly impossible to know how many people died before receiving full value from their deferred payments.
He continued: “Deferring entitlement to the State Pension is a personal choice based on an individual’s circumstances. It is the claimant’s responsibility to decide when to claim, including whether to defer it.
“Whether deferring a claim to the State Pension is the right decision will depend on a range of factors including, for example, length of deferral, employment, dependents, tax position before and after claiming the State Pension, and entitlement to other benefits.”
According to a Freedom of Information request (FOI) from Royal London, nearly 42,000 people deferred their state pension during the 2023/2024 tax year. Meanwhile, data from Which? revealed that one in four had postponed their payments by five years or longer.
Bell added: “Deferring can affect the amount and timing of payment, and this is a decision only the claimant can make. Individuals are signposted to deferral information on the Government website when they are invited to claim their State Pension; and an invitation to claim letter is issued up to four months prior to a customer reaching State Pension age.”
As deferring can have an impact on other benefits, the minister advised people to get guidance before making a decision. Deferring your state pension can also have a knock-on effect on your current financial circumstances and tax liabilities you may later face.
