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State pension deferral

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State pension deferral is the right to defer entitlement to the state pension. In return for deferring a lump sum accrues with interest added to the deferred entitlement at a rate normally of 2% over bank base rate. Therefore the deferral claim cannot accurately be evaluated in advance. Examples of the potential lump sum entitlement are shown in our tax rates.

When is the state pension payable?

Currently the state pension is due at the age of 65 for a man. Women’s state pension is rising to 65 from 2010 to 2020 so that from 6 April 2020 the state pension age for women will be the same as for men. From 2024, the state pension age for both men and women will gradually increase from 65 to reach 68 in 2044/46.

Deferral options

Defer to increase weekly pension
If entitlement to state pension is waived for five weeks or more extra state pension will be paid when state pension is claimed. For example: if the weekly state pension entitlement is £100 each week, this will increase as follows:

Weekly State Pension Years claim put off Extra state pension entitlement Additional cumulative state pension entitlement for 5 years
Each week Each year
£100 1 £10.40 £541 £2,704
  2 £20.80 £1,082 £5,408
  3 £31.20 £1,622 £8,112
  4 £41.60 £2,163 £10,816
  5 £52.00 £2,704 £13,520

Defer to secure lump sum

A one off payment entitlement accrues where a claim to state pension is deferred continuously for at least one year. In this situation a one off payment becomes due which is calculated based on the amount of state pension entitlement as well as interest. The interest will always be at least 2% above base rate.

The option to defer arises both before entitlement is claimed or while payment is being made and a request is made to cease payments. This is a one time option.

The deferred lump sum is not added to the rest of your income to work out your total income for tax. Instead, the rate of tax due on your deferred lump sum will be the highest main rate of tax that you pay on your other income.

What is the state pension entitlement?

A state pension forecast can be requested by visiting www.thepensionservice.gov.uk, or by calling the forecasting team on 0845 3000 168 (textphone 0845 3000 169).

Deferral contact details

Call: 0845 60 60 265 (Welsh – speakers living in Wales: 0845 60 60 275)
Textphone: 0845 60 60 285 (Welsh textphone: 0845 60 60 295)

These calls are free from BT land lines. Calls from mobile phones may be charged at premium rates. A request may be made for the operator to call back.