The Department for Work and Pensions (DWP) is warning that deferring your state pension in an attempt to amass a larger retirement fund may not always result in you getting more cash. The state pension isn’t automatically received – it must be claimed.
You can either claim your State Pension or choose to delay or defer it. If you opt to defer, do nothing – your pension will be deferred until you decide to claim it.
Yet many may not realise that certain benefits and specific circumstances could stop your state pension being boosted when you defer it. This might include benefits that your partner receives, even if you don’t, or if you are incarcerated.
Deferral is often used by those who continue working past the state pension age, as it allows them to accumulate a more substantial pension pot for their eventual retirement. For individuals on the new state pension system, you must defer your state pension for at least nine weeks.
Your payments will increase by approximately 1% for every nine weeks. This means if you’re entitled to the full £221.20 per week payment but defer it for a year, you’ll receive an extra £12.82 per week when you start claiming it, according to GOV.UK. While this may seem appealing, be aware that it’s not always the case.
If you’re in receipt of any of the following benefits, you won’t be able to accumulate extra state pension when deferring:
- Unemployability Supplement
- Income Support
- Jobseeker’s Allowance (income-based)
- Widow’s Pension
- Employment and Support Allowance (income-related)
- Pension Credit
- Incapacity Benefit
- Carer’s Allowance
- Widowed Parent’s Allowance
- Universal Credit
- Severe Disablement Allowance
- Carer Support Payment
Similarly, if your partner is receiving any of the following benefits, you will not be able to accumulate extra state pension when deferring:
- Universal Credit
- Pension Credit
- Income Support
- Employment and Support Allowance (income-related)
- Jobseeker’s Allowance (income-related)
You must defer your state pension for a certain number of weeks for any extra to start accumulating. Any weeks you or your partner receive these benefits will not count towards this deadline.
If you are able to increase your weekly state pension payments by deferring, this could reduce the amount you receive from the following benefits:
- Jobseeker’s Allowance (income-related)
- Universal Credit
- Income Support
- Pension Credit
- Tax credits
- Council Tax Reduction
- Employment and Support Allowance (income-related)
- Housing Benefit
Choosing to defer your state pension can also affect other benefits. For instance, individuals who are eligible for Winter Fuel Payments but have chosen to defer their state pension will need to apply for this benefit separately as it won’t be automatic.
