A quarter of retirees aged 55-64 are unaware of the State Pension deferral option, a new survey by Just Group has shown.
Women were significantly more likely than men (26% vs 19%) not to know about the possibility of deferring the State Pension, while 26% of those aged 75 and over were also unaware that deferral was an option.
Fewer than one in 10 (7%) over-55s said they had used State pension deferral themselves.
Someone reaching State Pension age, which currently stands at 66, can either claim State Pension or defer. Even if someone is receiving State Pension, they can still choose to defer but can only do this once.
Those who reach State Pension age on or after 6 April 2016 and choose to defer can benefit from a 1% increase in their weekly State Pension for every nine weeks that payments are deferred, equivalent to nearly 5.8% extra income for every full year deferred.
With the State Pension set to rise to £221.20 a week from April 2024, pensioners who defer their payments for the 2024/25 financial year will benefit from an extra £12.78 a week. This equates to £664.58 of additional payments across an entire year, Just Group said.
Those who reached State Pension age before 6 April 2016 and defer receive an extra 1% State Pension income for every five weeks deferred, amounting to a rise of £916.66 for the year.
Stephen Lowe, group communications director at Just Group, said: “Deferring can be a good option for people who don’t need the income immediately, perhaps they are still working or have other sources of cash, so it is disappointing a quarter of those approaching State Pension age don’t know about the option.”
Lowe said deferring has become less attractive in recent years because the terms have become less generous for those who reached State Pension age on or after 6 April 2016 and there is no option to take the deferred income as a lump sum.
“However, even for those who reached State Pension age after that date, in some circumstances it can still make sense to forego some income in the short term for a higher income in later life that is currently guaranteed to keep up with inflation. The State Pension is a straightforward idea that most people understand but the details can be complex. It provides an important bedrock of income for many pensioners so it’s very important people have a full understanding of all the options that are available to them,” Lowe added.
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