The Department for Work & Pensions has launched a call for evidence on State Pension deferral, seeking to better understand why people delay claiming and how well they understand the options available to them.
The Department for Work & Pensions (DWP) has launched a call for evidence on State Pension deferral, as it looks to better understand why people choose to delay claiming their State Pension, their awareness of the options available and the outcomes of those decisions.
State Pension deferral allows individuals to postpone claiming their State Pension and can result in a higher weekly payment when it is eventually taken.
Commenting on the announcement, Kelly Parsons, head of DC proposition at Broadstone, said the review comes at a time when concerns around retirement adequacy remain prominent.
“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.”
Parsons noted that changing working patterns could make deferral a more relevant consideration for some retirees.
“With more people working longer into their careers, whether through choice or financial necessity, deferring the State Pension may become an increasingly attractive option.
“Longer life expectancies and concerns about whether pension savings will stretch throughout retirement could also encourage people to delay claiming in order to secure a higher guaranteed income throughout retirement.”
The call for evidence also follows previous changes to the incentives available for those choosing to defer their State Pension.
Parsons said: “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.”
She added that the decision to defer remains highly individual and may not be suitable for everyone approaching retirement.
“Ultimately, deferral is far from a one-size-fits-all solution and is another complex decision we are asking pension savers to make as they approach retirement. While it can boost later-life income, delaying access to the State Pension may not be financially viable for everyone.
“As the Government looks to tackle pension adequacy, helping savers understand their options and plan effectively for increasingly complex retirement journeys must be a priority.”
The DWP’s review is expected to provide further insight into how people use State Pension deferral and the factors influencing decisions around when to begin drawing retirement income.
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