Personal Finance

DWP to boost state pension by £666 for rest of your life if Brits 'defer' payments - how it works

Britons can boost their state pension by delaying when they start to withdraw it. But is it worth it for you? We look at the pros and cons.

The state pension increases by 1% for every nine weeks you defer claiming it.

The Department for Work and Pensions will therefore top up your pension payments by nearly 5.8% if you delayed taking the pension for a whole year.

At the current full state pension of £11,502 a year, that would give you a £666 boost every year for the rest of your life.

The amount would be even higher as the state pension rates go up over time.

So if you're happy to work an extra year, or have savings or a private pension, you might think it a good idea to hold off from taking your pension.

It's worth remembering at £666 a year, it would take you 17 years until you're better off.

But under the triple lock, the state pension rises in line with the rate of inflation, average annual earnings, or 2.5%, whichever is highest.

Assuming the state pension rises by 2.5% every year, it would take 15 years to be better off, Which? estimates.

If you're feeling fit and healthy, you might end up with much more money as you get older.

Or you may decide the payback time is not worth the risk.

You also won't build up any extra pension for any days you're receiving any of the following benefits:

  • Income support
  • Pension credit
  • Employment and support allowance
  • Jobseeker's allowance
  • Carer's allowance
  • Incapacity benefit
  • Severe disablement allowance
  • Widow's benefit

Which? said: "The long wait to recoup what you've given up means there's a risk you could not live to earn back the extra pension you deferred for.

"If you do live for more than 15 years after taking your state pension - say reaching age 82 having taken your state pension at 67 - having deferred it for one year, you would receive more overall than if you had taken the income straight away.

"Life expectancy at 65 is 19 years for males (84) and 21 years for females (86) according to data from the Office for National Statistics 2021 census.

"So it’s worth it if you have an average or longer lifespan, but only just."

State pension age

The current age you qualify for the state pension is 66, but rises to 67 by the end of 2028.

Next year there is set to be a review to discuss raising the age again to 68.

Former pensions minister Steve Webb, who is now a partner at actuarial firm LCP, told the Guardian: “Anyone planning to work past pension age might want to put off taking their state pension, as otherwise their pension will be added to their wages and taxed in full.”

Read more:

Helen Barnett

Helen is a journalist, editor and copywriter with 15 years' experience writing across print and digital publications. She previously edited the Daily Express website and has won awards as a reporter. Read more here.


NimbleFins Newsletter

Get energy alerts, deals, tips, news, and more!