Thousands of Britons approaching retirement age could significantly increase their annual income by nearly £700 through a little-known government option, according to new data from the Department for Work and Pensions.
Widespread lack of awareness about pension deferral
Retirement specialist Just Group has analysed official data, revealing that a staggering two-thirds (66%) of people aged 40-65 are completely unaware they can delay claiming their State Pension beyond the official State Pension age.
Even among the minority who knew about this option, significant confusion remains. One-third (33%) of those aware were uncertain how deferring would affect their payments, while a further 8% mistakenly believed they would receive the same amount or less if they postponed claiming.
This knowledge gap translates directly into action, with only 10% of adults aged 66-75 reporting they had actually deferred claiming their State Pension.
How much could you gain by deferring?
For those receiving the New State Pension, the system offers a compelling incentive to delay. Every nine weeks of deferral increases your weekly State Pension by 1%, equating to approximately 5.8% extra income for every full year you postpone claiming.
Calculations for the 2025/26 financial year show that deferring would provide an extra £13.35 per week. This amounts to a substantial £694.20 additional annual income for life, plus any future inflation-linked increases.
Stephen Lowe, group communications director at Just Group, explained: "Deferring your State Pension is effectively a trade-off between receiving your full State Pension payments today or an increased State Pension later."
Is pension deferral right for you?
The decision to defer requires careful consideration of personal circumstances. The most common reasons people choose to delay include not needing the money immediately (49%) and being attracted to the higher income later (48%). A further 20% preferred to wait until they had completely stopped working before claiming.
It takes approximately 17 years to break even if you defer the State Pension for one full year, making health and life expectancy crucial factors in your decision.
Lowe advised: "Delaying the State Pension may not work for everybody but it's certainly an option worth knowing about and exploring in more detail for those people who don't need the money immediately."
State Pension increases under Triple Lock
Meanwhile, millions of pensioners are set to receive a substantial State Pension increase from April following confirmation of the Triple Lock mechanism components. The New and Basic State Pensions will increase by 4.8% under the earnings growth measure.
This means those on the full New State Pension will receive £241.30 per week, while those on the maximum Basic State Pension will get £184.90 per week. Chancellor Rachel Reeves will confirm the annual uprating at the Autumn Budget on 26 November.
It's important to note that the amount of State Pension someone receives depends on their National Insurance contributions. To receive the full New State Pension, you typically need around 35 years' worth of contributions, though this may vary if you were "contracted out".
