Retirement Income 

State pension deferrals drop

State pension deferrals drop

Fewer individuals are opting to defer their state pension, according to latest government figures.

Analysis of data from the Department for Work and Pensions released on Tuesday (May 14) by pension provider Just Group has found that fewer people are deferring their state pension than at any time in the past 20 years.

Whereas one in nine people were benefiting from deferring their state pension in 2004 just one in every 12 are currently.

According to the data, 1.2m individuals were receiving extra income by deferring the state pension in September 1999 but this dropped to 1m individuals in September 2018.

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 £168.60 a week, that would boost their annual income by £500 for every year deferred, said Just Group.

Stephen Lowe, group communications director at Just Group, said: "The biggest recent change was alongside the introduction of the new state pension in 2016 when the returns were made less generous.

"Even so, in today’s low interest rate environment they remain relatively healthy, particularly as the extra income is uprated with consumer price index inflation.

"In general, deferral could work well for those in good health who are perhaps still working or who find that their state pension income pushes them into a higher tax band than necessary."

amy.austin@ft.com

What do you think about the issues raised by this story? Email us on fa.letters@ft.com to let us know