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Pensions and retirement planning
State Pension deferral – taking up your State Pension later
If you put off claiming your State Pension, you can earn either extra State Pension or a one-off taxable lump sum payment. Knowing your options helps you make better decisions when you reach State Pension age.
What is State Pension deferral?
You don’t have to retire when you reach State Pension age. 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.
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.
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.
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.
If you reach State Pension age before 6 April 2010
If you wish to get an Adult Dependency Increase (ADI) you must do the following things by 5 April 2010:
- claim your State Pension and establish your entitlement
- send in your written claim for an ADI
Your claim for your ADI may be sent today and must be received by your pension centre by 5 April 2010.
Note that you need to post your claim early because of the Easter bank holiday. If your claim is received on 6 April or later you may not be able to get the ADI.
What if you reached State Pension age before April 2005?
If you started receiving State Pension before April 2005, you can choose to cancel your claim to build up entitlement to extra State Pension or a lump sum payment.
You can cancel your claim in this way only once. To qualify, you must be normally resident in the UK, in the European Economic Area or Switzerland.
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. But you will need to tell The Pension Service what you want to do if you are already claiming another social security benefit.
If you are already getting your State Pension, but 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.
Living abroad
You may be able to put off your State Pension if you lived in one of the following countries:
Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, The Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland.
To put off claiming your State Pension you must be either:
- a UK national
- a national of one of these countries
- entitled to live in one of these countries
You will not be able to put off your State Pension if any of the following apply:
- you live outside of the UK
- you live outside the countries listed
- you have already claimed your State Pension
