Most people claim their State Pension as soon as they reach State Pension age. But it isn’t your only option. You can choose to defer; either delaying your claim, or stopping payments you’ve already started, and receive more money later, either as a one-off payment or as higher regular payments.
What is State Pension deferral?
Deferral simply means putting off claiming your State Pension, or pausing it once it’s started, until a time that suits you better. In exchange, you receive the value of that deferred pension in the future. Common reasons for deferring include:
- No immediate financial need: you have other income and don’t need the State Pension right now
- Still working: you’d rather wait until you’ve stopped work, particularly if the extra income would be taxed at a higher rate
How to defer your State Pension
Your State Pension is not paid automatically when you reach State Pension age. Shortly before you get there, you’ll receive correspondence from the Department for Work and Pensions (DWP) explaining how to make a claim.
From that point you have two choices: submit a claim, or defer. If you want to defer, you don’t need to do anything at all. Your pension is automatically deferred until you decide to claim it.
Can you defer if you’ve already started claiming?
Yes, but only once. If you’re already receiving your State Pension, you’re allowed to pause payments on a single occasion. This might suit someone returning to work, for example. Once you restart the claim, however, you cannot defer again.
Deferral rules differ depending on when you reached State Pension age
There are two sets of deferral rules, and which applies to you depends on whether you reached State Pension age before or on/after 6th April 2016.
If you reached State Pension age before 6th April 2016
You have two options when you decide to claim.
Option 1: Extra State Pension: You earn extra State Pension at a rate of 1% of your weekly pension for every five weeks you defer. That works out at around 10.4% extra for each full year of deferral. The increased pension is taxed as normal from the point you start claiming.
Example: Margaret is entitled to the full basic State Pension of £184.90 a week (2026/27 rate). She defers for one full year. Her pension increases by around 10.4%, to roughly £204.13 a week, an extra £19.23 a week, or around £1,000 more a year.
Option 2: A one-off lump sum: Alternatively, you can take a one-off lump sum instead of an increased regular payment. To qualify for this, you must defer for at least 12 consecutive months. The lump sum is made up of the State Pension you didn’t claim, plus interest added each week and compounded at 2% above the Bank of England base rate. This means you receive more than the total of the regular payments you’d have had if you’d claimed at the earliest opportunity.
Example: Instead of taking extra weekly pension, Margaret opts for a lump sum after deferring for 12 months. She gives up around £9,615 of pension over the year (£184.90 × 52), and receives that amount back as a single payment, plus compounded interest at 2% above base rate.
Two important points on lump sums:
- You cannot mix and match. It’s either the full lump sum, or extra regular payments, not part of each.
- The lump sum is taxable, because the State Pension is taxable income. However, it isn’t taxed in the same way as regular pension income. The rate applied is generally the highest rate of income tax that applies to your other income for the relevant tax year. You can choose to receive the lump sum in the tax year you stop deferring, or delay it to the following tax year which, depending on your circumstances, may be more tax-efficient.
If you reached State Pension age on or after 6th April 2016
Under the new State Pension rules, any entitlement built up through deferral is paid as extra State Pension, usually as an increased regular payment. The rate is 1% for every nine weeks deferred; around 5.8% extra for each full year. This is paid alongside your normal State Pension and taxed as normal.
Example: Tom is entitled to the full new State Pension of £241.30 a week (£12,547.60 a year, 2026/27 rates). He defers for one full year. His pension increases by around 5.8%, to roughly £255.30 a week, an extra £14.00 a week, or around £728 more a year.
There is no lump sum option under the new rules. However, you can choose to backdate your claim by up to 12 months and take a one-off arrears payment instead. If you’ve deferred for longer than 52 weeks, the remainder is paid as extra State Pension.
Example: Tom defers for 18 months. He could backdate his claim by 12 months and receive that year’s pension (around £12,548) as a one-off arrears payment, with the remaining six months of deferral converted into extra State Pension on his regular payments.
The crucial difference between this arrears payment and the pre-2016 lump sum, aside from the 12-month limit, is how it’s taxed. The one-off arrears payment is taxed in the year it was due, not the year it is paid. HMRC will collect the tax either through a change to your PAYE code or, if you’re within Self- Assessment, via an amended return.
Potential considerations of deferring your State Pension
The cost of delay: You forfeit income during the deferral period. The full new State Pension is currently around £12,547.60 a year. That’s a significant sum to give up, and it needs to be weighed carefully against the higher payments you’ll receive later.
The break-even point: How long will it take to recoup what you’ve lost? The break-even point is the age at which the extra pension has repaid the income you gave up.
Based on 2026/27 figures:
- Full new State Pension: £12,547.60 a year
- Extra pension from one year’s deferral (5.8%): approximately £728 a year
- £12,547.60 ÷ £728 ≈ 17 years
So if a basic-rate taxpayer deferred for one year and began claiming at 67, they would need to live to around age 84 to recoup the £12,547.60 they missed out on in that first year.
This break-even period is crucial to understand before committing. The exact calculation varies depending on several factors including your marginal rate of tax during and after deferral, how long you defer for, and future increases under the triple lock. We’d recommend speaking to a pensions adviser to get the full picture for your circumstances.
Impact on means-tested benefits: A higher State Pension income following deferral could affect your eligibility for means-tested benefits, including Pension Credit, Housing Benefit, and Council Tax Reduction.
Even a small increase in income could disqualify you from these benefits and the associated advantages that come with them.
It’s also worth noting that if you’re receiving certain benefits such as Pension Credit, Income Support, or Universal Credit, you will not build up any increase to your State Pension while deferring.
Your State Pension stops when you die: Unlike private pensions, which can often be passed to beneficiaries, the State Pension generally stops on death. While a spouse or civil partner may inherit some benefits in certain circumstances, the enhanced payments earned through deferral typically cannot be passed on.
Is deferring your State Pension right for you?
State pension deferral can be a valuable tool for boosting retirement income, but it is a decision that needs to be considered carefully. The right answer depends on your health, your other income, your tax position, your benefit entitlements and your wider retirement goals.
If you’re unsure whether deferral could be beneficial for you, seeking guidance from a regulated financial adviser can help you make an informed choice that aligns with your personal circumstances. We’d strongly advise speaking to a pensions adviser or an IFA to discuss the best solution for you.
For more information, visit the official GOV.UK guidance on deferring your State Pension, or contact the Pension Service for personalised advice on your situation.
The information in this post is accurate as of its publication date and may become outdated over time. This content is provided for general informational purposes only and should not be considered technical advice. If you have any questions or need guidance specific to your situation, please get in touch with our team.
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