New rules regarding the options allowing you to defer your state pension came into force in April.
Those who choose to claim their state pension late can now take a lump sum payment, or receive higher weekly pension payments.
The new choices mean people: l can get more extra State Pension for life when they do finally claim; or l in certain circumstances, can chose a one-off taxable lump sum payment; and l can put off claiming for as long as they want to earn extra State Pension or build up a lump sum payment
For the first time, people who choose to defer their State Pension can receive a one-off taxable lump sum payment instead of a weekly increase, when they finally claim.
To be eligible for the lump sum option, you must defer for at least 12 consecutive months.
Your lump sum will be based on the amount of weekly State Pension you would have received with an interest rate at 2% above the Bank of England base rate.
If you choose a lump sum, your weekly State Pension will then be paid at the normal rate.
To be eligible for extra weekly State Pension people must defer for at least five weeks.
Your weekly pension will increase by 1% for every five weeks you do not claim (before 6 April the increase worked out at 1% for every 7 weeks).
The maximum time limit of 5 years that you can put off claiming your State Pension to earn extra State Pension has been removed which means you can now put off claiming State Pension for as long as you want and be able to earn extra State Pension, or a lump sum.
A person who deferred a state pension entitlement (including Basic State Pension and State Second Pension) of £105 for anytime over one year could get a lump sum of: l £5'646 if they defer for one year
l £11'673 if they defer for two years
l £32'306 if they defer for five years
Someone on the same rate of State Pension who chooses to receive an increased weekly amount added to their state pension for life instead of the lump sum could receive a total weekly pension of:
l £110.90 if they defer for one year
l £121.80 if they defer for two years
l £154.60 if they defer for five years
For more information please contact:
International Pension Centre: +44 191 21 82828
Textphone: +44 191 21 87280
Or visit the Pension Service Website:
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