State pensioners can add an extra £666 to their pension pot thanks to a little-known rule, but it will mean delaying your retirement for another year.
You can currently claim the new State Pension when you reach State Pension age if you’re a man born on or after April 6, 1951, or a woman born on or after 6 April 1953. If you were born before these dates, then you’ll get the basic State Pension instead.
But you won’t receive your State Pension automatically once you reach State Pension age, as you have to submit a claim for it.
You’ll receive a letter no later than two months before you reach State Pension age – which is currently 66 for both men and women – asking you if you want to either claim your pension, or defer claiming it.
If you opt to defer it then you don’t have to do anything, as your pension will automatically be delayed until you decide to claim it.
But while choosing to delay your retirement might not sound like the most appealing option, doing so will allow you to add an extra £666 to your pension pot.
If you reach State Pension age on or after April 6, 2016 – so those born after 1949 – then your pension pot will increase every week you defer – providing you defer for at least nine weeks.
Currently, for every nine weeks you defer, your State Pension will increase by 1%, which works out as just under 5.8% for a whole year, or £666.
The new State Pension is currently worth £221.20 per week, so by opting to defer for 52 weeks, you’ll get an extra £12.82 per week – amounting to £666.64 over the course of a year.
Of course, if there is an annual increase in the State Pension then the amount you can get could be much larger.
Chancellor Rachel Reeves confirmed in the autumn Budget last year that pension would be uprated by 4.1% in 2025, with Labour committing to the Triple Lock to protect pensioners in their retirement.
The 4.1% uprating will apply to both the basic and new State Pension in the 2025/26 tax year, with the new rates taking effect from April. The uplift means more than 12 million pensioners will be up to £470 better off per year when the new rates kick in.
The Department for Work and Pensions (DWP) has confirmed the new State Pension will rise from £221.20 to £230.25 per week from April.
