The Department for Work and Pensions (DWP) has launched a review into State Pension deferral arrangements, which allow people to delay claiming their retirement payments in return for a potentially higher weekly amount.
The six-week call for evidence, launched on October 20, will examine why people choose to defer their State Pension, how well they understand their options and whether the decision benefits them financially. The DWP is also seeking information about the difficulties people experience when deciding whether to delay claiming their pension. The exercise closes on December 1, 2026.
The DWP has stressed that no specific policy changes are being proposed at this stage, but the findings could identify areas requiring further consideration.
Current deferral rules
Under the current rules, people who reach State Pension age on or after April 6, 2016 can increase their weekly payments by just under 5.8 per cent for every full year they defer claiming. However, the arrangements are less generous than those available to people who reached State Pension age before April 2016, when the annual increase was just under 10.4 per cent.
Kelly Parsons, Head of DC Proposition at independent pensions consultancy Broadstone, warned that any further changes to the arrangements would need careful consideration.
She said: "The DWP's call for evidence comes at a time when pension adequacy is an increasingly pressing concern, with many people facing the prospect of entering retirement without sufficient savings to maintain their standard of living."
She added: "The Government has already made deferral less financially attractive, so this call for evidence may raise questions about whether further changes to the current arrangements could be considered. Any move to restrict or remove deferral incentives would need to be carefully weighed against the importance of giving people flexibility over how they fund their retirement."
Former DWP employee shares experience
Sandra Wrench, a former DWP employee with 42 years of experience working with State Pensions and benefits, deferred her own State Pension for around eight years and managed to double her payments under the previous arrangements. Sandra reached State Pension age in November 2013 but continued working part-time and did not claim her pension until May 2021.
She told the Daily Record: "Having deferred my SP for 8 years I managed to double my SP, but with the increase in SPA, this will not give many people the opportunity to defer."
Sandra explained that the previous deferral arrangements allowed her to increase her State Pension by 10.4 per cent for every year she delayed claiming. She estimates that it will take around 10 years of receiving her increased payments to recover the State Pension income she gave up during the deferral period.
For people reaching State Pension age after April 2016, the lower annual increase means it can take considerably longer to recover the payments forgone. The DWP's current guidance states that someone deferring the full new State Pension for 52 weeks would need more than 15 years of receiving the increased payments to recover the income they missed.
Sandra also highlighted tax as an important consideration for people who continue working beyond State Pension age. She said: "The main reason for deferring is tax. If you are working, earning over the £12570 personal tax allowance and claiming your state pension, you lose 20 per cent of your state pension in tax, so it makes more sense to claim your SP once you give up work."
Sandra confirmed that she intends to submit evidence to the DWP consultation.
How State Pension deferral works
People do not have to claim their State Pension as soon as they reach State Pension age. If they decide not to claim, their pension is automatically deferred and they do not need to notify the DWP.
For those reaching State Pension age on or after April 6, 2016, their weekly payment increases by one per cent for every nine weeks they defer, equivalent to just under 5.8 per cent for a full year. For example, someone entitled to the full new State Pension of £241.30 per week who defers for 52 weeks could increase their payment by approximately £13.99 per week. Deferring for two years could increase their weekly payments by around £27.99.
People can also choose to backdate their State Pension claim by up to 12 months and receive arrears instead of an increased weekly amount for that period. Different arrangements apply to people who reached State Pension age before April 6, 2016, including the option of an interest-bearing lump sum for those who deferred for at least 12 months.
Who can respond to the DWP call for evidence?
The consultation is open to individuals and organisations with knowledge or experience of State Pension deferral. The DWP wants to understand the reasons people defer, what influences their decisions, how well they understand the arrangements and whether they encounter any barriers.
It applies to Great Britain, including Scotland, although evidence from Northern Ireland is also welcomed where relevant. Responses can be submitted using the online forms available through GOV.UK until 11.59pm on December 1, 2026.
The Department has confirmed that the exercise is intended to gather evidence about how the current arrangements work and does not assume that existing rules should either be retained or changed. The full call for evidence is available on GOV.UK.
