State Pension  

State pension deferrals drop to lowest level since 1999

State pension deferrals drop to lowest level since 1999

The number of savers receiving an increased state pension after opting to defer this benefit has fallen to its lowest level since 1999, according to latest government figures.

Analysis of data from the Department for Work and Pensions by pension provider Just Group found in September last year 959,000 individuals were receiving a higher weekly amount after deferring their state pension, equivalent to 7.7 per cent of all state pensioners.

This is down from a peak of 11 per cent in 2004 when 1.25m pensioners received extra income. 

According to the data, most of the fall has been among women, who have seen their state pension age rise steadily from age 60 in 2010.

Women now make up 73 per cent of those receiving extra pension income, down from 80 per cent in 2004. 

It could also be that lack of awareness is driving down deferral numbers, Just said.

A survey carried out by Just in April found that, out of 1,043 retired and semi-retired adults, a quarter of over 65s were unaware they could receive a higher weekly payment or even a lump sum by deferring, rising to 29 per cent among 55-64 year olds.

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.”

Since April 6, 2016, those deferring can receive 1 per cent more income for every nine weeks they defer, equal to almost 5.8 per cent extra for every year deferred.

For someone on the full state pension of £179.60 a week, that would boost their annual income by £540 for every year deferred, according to Just.

Those who reached state pension age before this date can still opt to defer with the return set at 1 per cent for every five weeks deferred, or 10.4 per cent a year.

Lowe said: “It reinforces the message to people approaching retirement to take up their entitlement to the free, independent and impartial guidance that the government offers through the Pension Wise service.

“Although highly valued by people for increasing their understanding and helping them to avoid scams, too few people are receiving the government backed service which means many thousands of people each year are at risk of making uninformed decisions.” 

amy.austin@ft.com

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