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What is State Pension deferral?

State Pension deferral means you can put off claiming your State Pension when you reach State Pension age. You can also choose to stop claiming it after having claimed it for a period. Since the State Pension was introduced, people have been able to earn extra State Pension in this way.

Your State Pension age is set by law. It is 65 for men born on or before 5 April 1959 and 60 for women born on or before 5 April 1950. The State Pension age for women born on or after 6 April 1950 but before 6 April 1955 is rising from 60 to 65 between 2010 and 2020. The State Pension age for women born on or after 6 April 1955 but before 6 April 1959 is 65. State Pension age will increase for both men and women from age 65 to 68 between 2024 and 2046.

The age at which you retire from employment does not affect when you can start drawing your State Pension after you reach State Pension age.

• Changes to the State Pension age (money, tax and benefits section)
• Use the State Pension age calculator on The Pension Service website (opens new window)

More choice when deferring your State Pension

Now that people are living longer and healthier lives, it makes sense to make it easier to work flexibly after State Pension age.

Since 6 April 2005, if you put off claiming your State Pension, (whether you are working or not) you can choose one of the following options when you do claim.

Extra State Pension

If you put off claiming your State Pension for at least five weeks you can earn an increase to your State Pension of 1 per cent for every five weeks you put off claiming. (This is equivalent to about 10.4 per cent extra for every year you put off claiming.)

A lump sum payment

If you put off claiming your State Pension for at least 12 consecutive months, which must all have fallen after 5 April 2005, you can choose to receive a one-off lump sum payment and your State Pension paid at the normal rate. The lump sum payment, when you claim it, will be based on the amount of normal weekly State Pension you would have received, plus interest added each week and compounded.

You can put off claiming your State Pension for as long as you want in order to earn extra State Pension or a lump sum payment.

• State Pension deferral – more details (opens new window)

Changes to the rules which affect deferral

From 6 April 2010, it will no longer be possible to claim an increase of your State Pension for another adult. This is an ‘adult dependency increase’. It is an increase in your State Pension for a wife, husband or someone who is looking after your children, if he or she is considered to be financially dependent on you.

If you are already entitled to this increase on 5 April 2010, you will be able to keep it until you no longer meet the conditions for the increase or until 5 April 2020, whichever is first.

If you claim your State Pension on or after 6 April 2010, you will not be able to claim an increase for an adult who depends on you financially when you finally claim your State Pension.

• Find out more about adult dependency increases and the changes to the rules (opens new window)

What if you reached State Pension age before April 2005?

If you reached State Pension age before April 2005 and have started claiming your State Pension, you can choose to cancel your claim to build up entitlement to extra State Pension or a lump sum payment.

Note that you can only cancel your claim in this way once and only if you are normally resident in the UK. You may also have this option if you are residing in the European Economic Area or Switzerland, and are either a national of one of those countries or otherwise entitled to live there.

If you have not claimed your State Pension, when you finally do claim it, you will get an increase for the period up to 6 April 2005 based on the old rate of extra State Pension (about 7.5 per cent for a whole year). For the period falling after that date, you will be eligible either for an increase based on the new extra State Pension rate (about 10.4 per cent for a whole year) or, if you continue to put off claiming for a further 12 months, a lump sum payment.

Choosing State Pension deferral – what to do

If you have not yet claimed your State Pension but you want to put off taking it up, you do not need to do anything.

If you are already getting your State Pension, but you would like to stop claiming it to earn extra State Pension or a lump sum payment, you should contact your pension centre. The telephone number will be on any letters you have received from your pension centre.

• Contact The Pension Service (opens new window)

More useful links

• State Pension – more information (money, tax and benefits section)
• Information about pension reform (opens new window)
• The Pension Service (opens new window)