Deferring your State Pension for a higher payment

Deferring your State Pension means putting off your claim so that you get more when you do claim. Under the rules for anyone reaching State Pension age on or after 6 April 2016, you get 1% added to your regular weekly pension payment for life for every nine weeks you defer, which is just under 5.8% for each full year¹. You must defer for at least nine weeks before you can claim increased regular payments¹.

You do not have to do anything to start: if you do not claim your State Pension at State Pension age, it automatically defers until you claim it². There is no maximum deferral period, because payments only begin when you claim³. You can take the money you gave up as a one-off arrears payment of up to 52 weeks, as higher weekly payments, or as both¹.

The trade-off is time. It takes over 15 years to get back 52 weeks of deferred full new State Pension through the higher payments, and that payback period grows by around a year for each additional 52 weeks you defer¹. Independent analysis puts the break-even point for the new State Pension at 17 to 20 years³.

How deferring your State Pension works

Deferring is the official term for delaying your claim. If you delay taking your State Pension, you get larger weekly payments when you do start taking it⁶. The same principle applies across retirement income: you might be able to increase the amount you get if you delay your pension⁷.

The mechanics are unusually simple. Deferring is not something a person applies for: the pension is automatically deferred until it is claimed². A letter arrives no later than two months before State Pension age, setting out what to do². The Northern Ireland Pension Centre handles claims there, and the same automatic deferral applies².

There is one wrinkle for people who have already started claiming. If you have already started receiving the State Pension, it is still possible to defer it, but this can only be done once⁸. The same one-off rule applies under the older State Pension: you can defer receiving payments once you have already started claiming, though you can only do this once⁹.

Deferring is not the same as retiring. You can stop working and get your State Pension, continue working and also get your State Pension, or continue working and put off claiming, possibly with extra State Pension or a lump-sum payment later¹⁰. If you retire before State Pension age, you will have to wait to claim your State Pension¹¹.

How much extra you get: 1% for every 9 weeks you delay

For every nine weeks you defer, you get 1% added to your regular weekly pension payment for life¹. Under current rules, for every nine weeks that you delay taking your State Pension, your payments will increase by 1%⁸. The legislation behind this provides that a person is entitled to one increment for each whole week in the period during which entitlement to a State Pension was deferred¹².

The annual figure is just under 5.8% for each full year you delay claiming¹³. The State Pension increases by 1% for every nine weeks you put off claiming it, or around 5.8% for each full year⁹. Delaying your pension can increase your weekly payments by roughly 5.8% to 10.4% per year, depending on when you reached State Pension age⁵.

Worked examples from the official guidance make the sums concrete. If you defer for 52 weeks, you get an extra £13.99 a week, which is 5.8% of £241.30¹. If you defer for 104 weeks (two years), you get an extra £27.99 a week, 11.6% of £241.30¹. The equivalent figure given in Northern Ireland guidance is £27.88 a week for two years, also 11.6% of £241.30².

The rate is fixed by rules, not negotiated, and it does not vary with how much you have saved elsewhere or whether you are still working.

Extra weekly payments, a one-off arrears payment, or both

If you reached State Pension age on or after 6 April 2016, you can get the State Pension you have deferred as a one-off arrears payment, increased regular payments (known as extra State Pension), or both¹. The arrears payment covers up to 52 weeks, or 12 months¹.

The official examples show how the two combine. If you defer your full new State Pension for 27 weeks, you get a one-off arrears payment of £6,515.10¹. If you defer for 52 weeks, the one-off arrears payment is £12,547.60¹.

The combined option is the one most people miss. If you defer your full new State Pension for 78 weeks (18 months), you can backdate your claim by 12 months and get a one-off arrears payment of £12,547.60, plus £6.97 a week extra, which is 2.89% of £241.30, for the additional 26 weeks¹. In effect, the first 12 months come back as cash and the remaining six months convert into a permanent uplift.

If you reached State Pension age before the new State Pension: lump sum or higher payments

The rules differ for people who reached State Pension age before 6 April 2016. You can postpone claiming your State Pension, known as deferring, and get a higher pension or a lump sum when you do claim¹⁴. For every five weeks you defer, you get 1% of that amount added to your regular payment for life, which is just under 10.4% for every 52 weeks². The basic State Pension increases by 1% for every five weeks you defer¹⁵.

You cannot get both increased regular payments and a lump sum, unless you reached State Pension age and deferred before 2005². You must defer your basic State Pension for at least 12 months to get a one-off lump sum payment². Under the old rules you could also opt to receive a one-off lump sum plus interest if you deferred for at least a year, an option no longer available for those reaching State Pension age after April 2016⁸. If you defer for a year or more, you could qualify for a lump sum payment¹⁶.

The old rules also set a maximum that no longer applies. Historically, State Pensions could be deferred for up to five years, with an increment to the eventual income of one-seventh of 1% for every week deferred¹⁷. That structure has been replaced for anyone reaching State Pension age since April 2016.

How long it takes to get back the payments you gave up

This is the number that decides whether deferring suits your circumstances. It will take over 15 years to get back 52 weeks of deferred full new State Pension, and this time increases by around one year for each additional 52 weeks deferred¹. If you defer for a year, it will take at least 15 years for you to receive more overall than if you had taken the income straight away⁸.

Independent analysis is slightly more cautious. For the new State Pension, it typically takes 17 to 20 years of receiving the higher payments to recoup the money you gave up while waiting³.

The practical reading is that deferring rewards a long retirement and penalises a short one. Someone in poor health, or with a family history that suggests a shorter retirement, is giving up certain money now for a benefit that may not arrive. Someone in good health with other income to live on is in a different position. Neither the government nor any adviser can tell you which applies to you.

How the extra amount rises each year, and when it does not

The extra amount you build up by deferring is uprated differently from the main State Pension. After you claim, the extra regular amount you get because you deferred will usually increase each year based on the Consumer Price Index². The extra amount usually increases each year based on the Consumer Price Index, but will not increase for some people who live abroad¹.

The main State Pension works differently. The triple lock raises the basic and new State Pension every year by the highest of earnings growth, inflation, or 2.5%¹⁸. The increase matches one of three percentages, with the government choosing the highest of inflation (the previous September's CPI), average wage increase between May and July of the previous year, or 2.5%⁴. The triple lock increases the State Pension by inflation, wage growth or 2.5%¹⁹.

The deferred extra is excluded from this. This extra boost is excluded from the triple lock and only increases annually in line with inflation⁵. Over a long retirement, that gap compounds: the main pension can rise faster than the deferred increment sitting on top of it.

The triple lock has produced large single-year rises in the past. It was reinstated for April 2023, with a 10.1% rise in the State Pension²⁰. A deferred increment would not have received that increase.

Benefits and deferral: when you cannot build up extra State Pension

Deferring interacts with the benefits system in ways that can cancel out the gain. You cannot build up extra State Pension if you get certain benefits, and deferring can also affect how much you can get in benefits¹³. You cannot get extra State Pension if you get certain benefits, and deferring can affect benefit amounts².

Pension Credit is the clearest case. You cannot build up extra amounts for deferring your State Pension if you or your partner are getting Pension Credit²¹. If you have deferred your State Pension, the amount of State Pension you would get is counted as income²¹. You will not build up any State Pension increase for any weeks in your deferral period that you receive Pension Credit or Universal Credit²².

The overlapping benefit rule catches more people than Pension Credit alone. You also do not build up an increase for any week in the deferral period in which you receive one of these overlapping benefits: Severe Disablement Allowance, Incapacity Benefit, Carer's Allowance, Widow's Pension, Widowed Mother's Allowance, or Unemployability Supplement²³. If you are receiving any benefits, such as Carer's Allowance or Pension Credit, you will not be able to increase your State Pension by deferring⁸.

There is a further trap at the point of claiming. A higher weekly pension could disqualify you from Pension Credit³. The extra State Pension increases your income, and this could reduce the amount you get from certain benefits⁸.

Two protections are worth knowing. If you claim Pension Credit or Universal Credit while you are deferring your State Pension, they will be calculated as if you were getting your State Pension entitlement, allowing a grace period while deferring⁹. And deferring your State Pension should not affect PIP or other disability benefits²⁴.

How to delay your claim and claim later

If you do not want to claim yet, you can delay your State Pension¹¹. You may get more State Pension if you put off claiming²⁵. There are incentives for you to take your State Pension later, instead of when you reach State Pension age²⁶.

The process is passive. You do not need to do anything: your State Pension will automatically be deferred until you claim it²⁷. If you do not claim your State Pension at State Pension age, it automatically defers²³. You might be able to put off claiming your State Pension if you want to carry on working after State Pension age, which is called deferring²⁸.

When you are ready, you claim a deferred new State Pension online, though there is a different way to claim if you live abroad, including in the Channel Islands or the Isle of Man¹. If you start your claim over 12 months after you reach State Pension age, you will be treated as having deferred your pension²⁹. The same applies in Northern Ireland: if a claimant is more than 12 months late in submitting their claim after they became entitled to State Pension, they will be treated as having deferred their entitlement¹⁴.

One notification duty exists. You must tell the Northern Ireland Pension Centre if you are on benefits and you want to defer².

Deferring if you live abroad

You can claim State Pension abroad if you have paid enough National Insurance contributions to qualify³⁰. While abroad, you may be able to claim your UK State Pension³¹. You might also be eligible if you have lived or worked abroad³².

Where you move changes the deal. If you move to the EU and EEA, Switzerland, or a country with a UK social security agreement (except Canada or New Zealand), the rules for deferring your State Pension are the same as in the UK². If you move to a country that is not in that list, the extra payment you get will stay the same: it will not go up or down over time². In that case your extra payment will be based on the State Pension you are owed at whichever is later of the date you reach State Pension age or the date you move abroad².

You might be able to increase the amount you get if you delay your pension, or pay voluntary contributions to fill gaps in your National Insurance record³². You must choose which country you want your pension to be paid in, and you cannot be paid in one country for part of the year and another for the rest³². Payment timing can also shift: if your payment date falls on a public or bank holiday where you live, it may be delayed, and if your payment is due in the same week as a US federal holiday, it could arrive one day late³².

Inheriting a deferred State Pension

If a spouse or civil partner deferred their State Pension and has died, you may be able to inherit the extra. If your partner deferred their State Pension by between five weeks and a year, you will inherit it as weekly payments, paid with your own State Pension²⁰. If your partner deferred by a year or more, you can usually choose to inherit it as a lump sum or as weekly payments, and you will get a letter with the options you can choose from²⁰. Any extra weekly payment you inherit will be added to your State Pension, or paid when you start your claim if you have not reached State Pension age yet²⁰.

For the basic State Pension, you can usually claim the extra State Pension or get a lump sum if your spouse deferred, but you must not have remarried or formed a new civil partnership, and only once you have reached State Pension age¹⁵. If they deferred for less than 12 months, you can only get extra State Pension, and you cannot get a lump sum¹⁵.

Where to get help

Deferring is a decision about your own health, income and tax position, and the rules above are the framework rather than an answer. Pension Wise offers free, impartial guidance on your pension options⁴. MoneyHelper and the charities Age UK, Independent Age and Turn2us publish free guidance on State Pension and benefit interactions⁹. If you are on means-tested benefits, the calculation of how a deferred pension affects them is worth checking with a benefits adviser before you decide.