Pensioners could boost their payments by almost £700 each year through a little-known strategy. Many are unaware that they can delay claiming their State Pension, thus enhancing its worth.

The State Pension amount increases by 1% for every nine weeks it’s deferred, which equates to 5.8% per year. There are roughly 13 million pensioners across the UK, with 42,000 of these claiming a previously deferred pension during 2023/24, according to information obtained by Royal London via a Freedom of Information (FOI) request.

However, as reported by the Daily Record, this number dropped by more than a fifth (22%) compared to the previous year when 54,037 deferred pension claims were handled. The figures showed that one in four pensioners (10,656 people) had deferred their State Pension for five years or more.

The data also revealed that 4,435 individuals postponed claiming the contributory benefit for a decade or longer. The average deferral period was four years, giving those who delayed for this length of time roughly £50 extra weekly.

Delaying or deferring a State Pension means someone has chosen not to claim their State Pension when reaching State Pension age, which is currently 66, but is set to rise to 67 between April this year and 2028. The State Pension increases by 1% for every nine weeks of deferral, representing 5.8% annually.

Individuals who delayed claiming their State Pension prior to the New State Pension’s launch on 6 April 2016 were eligible for a more substantial uplift of 10.4% additional per year, which continued to build throughout their entire deferral period.

The data showed that 591 individuals had not claimed their State Pension for two decades or more after becoming entitled to receive it.

Some pensioners who started collecting their State Pension for the first time in 2023/24 had postponed for more than 30 years. The Freedom of Information request revealed that amongst the 25 longest deferred claims, the average postponement period was 32 years.

These ‘super-deferrers’ initially became eligible for their State Pension during 1991/92, when the qualifying age was 65 for men and 60 for women. Theoretically, most of these individuals would now be in their nineties, with some possibly exceeding 100 years of age.

People typically postpone claiming their State Pension for one of two motives:

• To obtain enhanced income from their State Pension when they eventually claim
• To reduce their current taxable income – making deferral beneficial for higher rate taxpayers

Nevertheless, whilst delaying your claim can lead to considerably higher weekly payments later, those who opt to defer under the current system may not live long enough to recoup the money they’ve sacrificed, especially if they’re basic rate taxpayers. For example, someone postponing for one year from January 2026 would get £243.60 per week in 2027, plus any Triple Lock rises during that period, meaning they’ll receive an additional £694.72 annually (before the rises).

However, throughout the year they postponed, they will have surrendered nearly £12,000 of State Pension, assuming they were entitled to the full new State Pension.

It’s essential to recognise that the Triple Lock uprating only applies to the base rate of the State Pension; supplementary components such as deferred payment uprate according to the September Consumer Price Inflation (CPI) rate.

If you’re a basic rate taxpayer and delay claiming the State Pension for one year, you’d need to live to approximately 82 to gain from the postponement. For someone with taxable income above £50,270, you’d only need to live to 79.

Responding to the findings, Sarah Pennells, Consumer Finance Specialist at Royal London said: “With the State Pension age now at 66 and due to start rising to 67 from April, many people are only too keen to claim their State Pension.

“However, our figures show that some people, for whatever reason, are delaying getting their State Pension payments. The numbers deferring in 2023/24 have fallen quite dramatically from the previous year, which could be because fewer pensioners are able to manage without the State Pension.

“However, with the new State Pension expected to rise to just below the personal allowance from April, we could see an increase in the numbers of people with other forms of income deferring, as they look to reduce the income tax they pay.”

Ms Pennells added: “If you’re thinking of delaying claiming your State Pension, then it’s a good idea to assess whether it is right for you. Getting the extra money may look attractive, but you are giving up the right to receive any State Pension payments until you stop deferring, and it could take years to see the benefit. The less tax you pay, the less worthwhile delaying might be.

“If someone defers their pension and then dies, their surviving spouse or civil partner will only receive the extra pension if the person who deferred reached State Pension age before 6 April 2016. These figures highlight why it’s so important to think carefully before making this decision.”

Benefits of postponing your State Pension

• Enhanced weekly payments: Each year you postpone results in a 5.% increase to your State Pension, providing you with greater income in later years
• Larger annual rises: Since annual uplifts are calculated as a percentage of your existing entitlement, a higher initial sum means more substantial yearly increases
• Tax advantages: If you remain employed upon reaching State Pension age, you’ll likely face income tax on your State Pension when combined with your wages or earnings. Postponing can help lower your tax liability by avoiding additional income during your highest-earning period

Drawbacks of postponing your State Pension

• You might never recover the lost income: Nobody can predict their lifespan, and postponing your State Pension could mean you never recoup the foregone payments
• Reduced current income: Postponing means forgoing money you could utilise immediately, which might impact your current lifestyle or savings capacity

Further information about postponing your State Pension is available on GOV.UK.