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State Pension deferrals drop to record low

The number of people receiving an increased State Pension after deferring the benefit has dropped to its lowest level since the figures started being recorded in 1999.

In September 7.7{d4ee6c39d3f4947aa08b0ac18d9d8b61a7295d521c90ad86a8a514771ea81e11} of State Pensioners (959,000 people) were receiving an increased weekly amount after deferring, according to new figures from the Department for Work and Pensions (DWP). That compares to a peak of 11{d4ee6c39d3f4947aa08b0ac18d9d8b61a7295d521c90ad86a8a514771ea81e11} in 2004 when 1.25m pensioners received extra income.

The majority of the fall was from women whose State Pension age began to rise from age 60 in 2010. Women now constitute 73{d4ee6c39d3f4947aa08b0ac18d9d8b61a7295d521c90ad86a8a514771ea81e11} of those receiving extra pension, down from 80{d4ee6c39d3f4947aa08b0ac18d9d8b61a7295d521c90ad86a8a514771ea81e11} in 2004.

Since 6 April 2016, those deferring can receive 1{d4ee6c39d3f4947aa08b0ac18d9d8b61a7295d521c90ad86a8a514771ea81e11} more income for every nine weeks they defer. This equals a return of nearly 5.8{d4ee6c39d3f4947aa08b0ac18d9d8b61a7295d521c90ad86a8a514771ea81e11} extra for every year deferred.

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Those who reached State Pension Age before April 6th 2016 can still opt to defer with the return set at 1{d4ee6c39d3f4947aa08b0ac18d9d8b61a7295d521c90ad86a8a514771ea81e11} more State Pension income for every 5 five weeks deferred, or 10.4{d4ee6c39d3f4947aa08b0ac18d9d8b61a7295d521c90ad86a8a514771ea81e11} a year, which can be taken either as extra income or a lump sum.

Research from Just Group has found that a quarter of over 65s are unaware they could receive a higher weekly payment or even a lump sum by deferring the date they started to receive the State Pension, rising to 29{d4ee6c39d3f4947aa08b0ac18d9d8b61a7295d521c90ad86a8a514771ea81e11} among 55-64 year olds.

The research from Just Group found that 10{d4ee6c39d3f4947aa08b0ac18d9d8b61a7295d521c90ad86a8a514771ea81e11} of pensioners surveyed said they had deferred their State Pension – broadly in line with the DWP statistics.

Stephen Lowe, group communications director at Just Group, said: “Deferring State Pension is still available and is something that should be considered alongside other retirement options.

“In some circumstances it can make sense to forego some income in the short term for a higher income in later life that is guaranteed to keep up with inflation.

“Our concern is that a quarter of over-65s are unaware it is an option, raising questions about the support they are receiving when making pension decisions.”

Research was conducted by Opinium on behalf of Just Group among 1,043 UK retired and semi-retired adults aged 55+ between 21 and 26 April.

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