State pension UK: How deferring payment could increase your monthly state pension amount
STATE PENSION payments are something many people will rely on later in life. It may be possible to get an increased payment per month, if one waits some time after they reach state pension age before claiming the money.
State Pension: DWP guide reveals full rate and how to claim
Whether it’s the basic or new state pension one is claiming, one must reach state pension age ahead of claiming the payment. The state pension age is rising, with plans for the age to reach 66 in October 2020. According to government plans, it will reach 67 between 2026 and 2028. Just because an individual has reached state pension age, it’s not to say that they must immediately claim the payment.
In fact, it is possible to delay - or defer - when the state pension is paid.
For those who reached state pension age on or April 6, 2016, provided that a person delays the state pension for at least nine weeks, then their state pension payment amount will increase for every week that they defer.
The increase is the equivalent of one per cent for every nine weeks of deferral.
The government website explains that over the course of the year, or 52 weeks, this works out at just shy of 5.8 per cent.
This additional amount is paid with the regular state pension payment.
If a person reached state pension age before April 6, 2016, then a state pension recipient can usually take the extra state pension age either as higher weekly payments or a one-off lump sum.
State pensioners may choose to defer their state pension payment amount
“When you claim your deferred State Pension, you’ll get a letter asking how you want to take your extra pension,” the gov.uk website states.
“You’ll have three months from receiving that letter to decide.”
Should a state pension claimant opt for the higher weekly payment, then they can do so - provided it is deferred for at least five weeks.
The state pension increases by the equivalent of one per cent for every five weeks deferred.
In a 52-week period, this works out at 10.4 per cent.
Alternatively, the lump-sum payment may be claimed by pensioners born after the aforementioned date, if they defer the state pension for at least 12 months in a row.
This will increase interest of two per cent above the Bank of England base rate.
The UK state pension increases annually, according to the triple lock guarantee.
After a person who deferred their state pension claims it, the extra amount they get will usually increase per year based on the Consumer Price Index.
That said, it won’t increase for some people who live abroad.