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If you put off claiming your State Pension (called 'State Pension deferral') you can earn either extra State Pension or a one-off taxable lump sum payment. If you're already paying tax you'll pay tax on these extra payments at the same rate as you're paying on your other income.
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State Pension deferral means you can put off claiming your State Pension when you reach State Pension age. You can also choose to stop claiming it after having claimed it for a period.
Your State Pension age is set by law. This is currently 65 for men. The State Pension age has started to gradually increase from 60 to 65 for all women born after 5 April 1950.
You can put off claiming your State Pension for as long as you wish – no matter what date you retire.
Follow the links below to learn more about State Pension deferral and changes to the State Pension age. These guides also cover the changes in State Pension age which take place from 6 April 2010.
State pension deferral taking up your State pension later (Opens new window)
Changes to the State Pension from 6 April 2010 (Opens new window)
Calculating your State Pension age on the Directgov website (Opens new window)
Since 6 April 2005, if you put off claiming your State Pension (whether you're working or not) you can choose one of the options below when you do claim.
If you put off claiming your State Pension for at least five weeks you can earn an increase to your weekly State Pension of one per cent for every five weeks you put off claiming. This works out at about 10.4 per cent extra for every year you put off claiming. The extra State Pension will be paid to you with your State Pension when you start to claim.
The extra State Pension counts as taxable income in the same way as the normal State Pension. If your income is low, no tax is due and you may be able to get other benefits. If you already pay tax, the extra income you get won't affect your current tax rate or any age-related allowance to which you're already entitled.
If you put off claiming your State Pension continuously for at least 12 months, you can choose to receive a one-off lump sum payment and your State Pension paid at the normal rate. The lump sum payment when you claim it, will be based on the amount of normal weekly State Pension you would have received, plus interest added for each week.
Your lump sum will not affect the rate at which you're already paying Income Tax - it will be taxed at the same rate.
If you're entitled to a higher age-related allowance, and a lump sum would take your income above the limit beyond which the age-related allowance starts to be reduced, you'll keep the higher allowance.
Age - related and other tax allowances
To find out what effect a deferred State Pension (whether taken as income or a lump sum) has on other benefits you may be claiming - including Pension Credit, Housing Benefits, Council Tax Benefit or Tax Credits - download The Pension Service leaflet SPD1, 'State Pension Deferral - your guide'.
If you haven't claimed your State Pension yet but you know you want to defer taking it, you don't have to contact The Pension Service until you want to start claiming it.
If you're already getting your State Pension, but you would like to stop claiming it to earn extra State Pension or a lump sum payment, contact your local pension centre. The telephone number will be on any letters you have received from The Pension Service - or you can search online below from the Directgov website.
Get contact details for your local pension centre from Directgov website (Opens new window)
