What putting off your State Pension adds for each week you wait

The State Pension does not start by itself. It has to be claimed, and if it is not, it is deferred automatically. GOV.UK puts it simply: if you do not claim at State Pension age, your pension defers and you do not have to do anything. For some people that happens by accident. For others, still working or with other income, it is a deliberate choice, because every week of waiting adds a little to the pension for the rest of their life.

Whether it is worth doing depends on arithmetic, health, tax and circumstances, and this article will not tell anyone what to choose. It does set out the rules, the official examples and the trade-off in plain figures.

Two sets of rules, depending on the date

How much deferral adds depends on when a person reached State Pension age. The dividing line is 6 April 2016, the start of the new State Pension. Men born on or after 6 April 1951 and women born on or after 6 April 1953 are under the new rules; anyone older is under the old rules, which were considerably more generous for deferral.

The new rules: one per cent every nine weeks

For people who reached State Pension age on or after 6 April 2016, GOV.UK states the rule as follows: for every 9 weeks of deferral, 1% is added to the regular weekly payment for life. That works out at just under 5.8% for every 52 weeks. Deferral has to last at least 9 weeks before any increase applies.

The 52-week figure is GOV.UK’s own example. The others are 1% steps on the 2026/27 full rate, for illustration. On a smaller pension, the increase is the same percentage of a smaller amount.

The extra is not a one-off. GOV.UK says it will usually increase each year in line with the Consumer Prices Index, though people living abroad may not receive those increases. That is a different rule from the main pension, which follows the triple lock, as explained in how the triple lock decides each April’s increase.

The alternative: arrears instead of extra

Someone who claims late does not have to take the higher weekly rate. Under the new rules they can take a one-off payment of the arrears instead, covering up to 52 weeks, with no interest added, or a combination of arrears and extra pension. GOV.UK’s examples: deferring a full new State Pension for 52 weeks gives a one-off arrears payment of £12,547.60, and 27 weeks gives £6,515.10. Deferral beyond 52 weeks can only be taken as extra State Pension.

The old rules: more generous, with a lump-sum option

For anyone who reached State Pension age before 6 April 2016 and has not yet claimed, the rates are different. GOV.UK says 1% is added for every 5 weeks of deferral, just under 10.4% for every 52 weeks, after a minimum of 5 weeks. On the full basic State Pension of £184.90, a year’s deferral adds £19.22 a week.

The old rules also allow a genuine lump sum, rather than simple arrears, for deferral of at least 12 months. GOV.UK states that it includes interest at 2% above the Bank of England base rate. A person can take the extra pension or the lump sum, not both, and has three months from the date on the claim letter to choose.

Deferral swaps money now for a little more money later. The question is how much later the two lines cross.

How long it takes to catch up

The simplest way to see the trade-off is to ask how many years of the higher pension it takes to make back what was given up while waiting. The example below uses the official figures and ignores tax and future uprating, so it is a rough guide only.

Seventeen years from State Pension age of 66 is 83. Whether that looks attractive depends on health, family history and how much the person values income now against income later. It is the same kind of judgement as the one between a guaranteed income and keeping savings flexible, which we set out in annuity or drawdown, set out without the sales pitch.

Who cannot build up extra State Pension

GOV.UK lists the benefits during which extra State Pension cannot build up. They include Pension Credit, income-related Employment and Support Allowance, Universal Credit, Carer’s Allowance and Carer Support Payment, and deferral also stops counting while a partner receives Pension Credit, Universal Credit or income-related ESA. Taking the extra as higher weekly payments can, in turn, reduce Pension Credit, Housing Benefit or Council Tax Reduction. For anyone on a low income, claiming on time is usually more useful than deferring. Time spent in prison does not count either.

One practical detail: GOV.UK notes that anyone who has deferred their State Pension needs to claim the Winter Fuel Payment, once, rather than receiving it automatically. Our guide to the Winter Fuel Payment after the income test covers the rest of that scheme.

Tax and inheritance

• Tax. The extra State Pension is taxable income in the same way as the pension itself. For someone still earning, deferring can move pension income into later years when their total income, and so their tax, may be lower. For others it simply adds to a taxable income later.
• If the person dies. A surviving husband, wife or civil partner can sometimes inherit some or all of the extra, depending on the dates involved. The rules are set out in what happens to a State Pension when a husband or wife dies.

Who this matters for, and what to check

• Anyone approaching State Pension age who is still working: the forecast and the claim letter show when the pension can start; not claiming defers it automatically.
• Anyone receiving, or likely to qualify for, Pension Credit: deferral will not build up extra and could cost money.
• Anyone whose pension is below the full rate: deferral adds a percentage of what they actually get. Our piece on why so many people receive less than the full rate explains how that figure is reached.
• Anyone who has already deferred and is about to claim: check whether arrears or extra pension is being chosen, and the deadline for choosing under the old rules.

The takeaway

Deferral is a straightforward trade: less now, more for life afterwards. Under the new rules the increase is just under 5.8% a year and takes many years to repay what was given up; under the old rules it is closer to 10.4%, with a lump-sum option. Neither is a hidden bonus, and for anyone on certain benefits it does not work at all. The useful step is to look at the actual figures on an official forecast or claim letter before letting the pension defer by default.