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State Pension deferral

  1. State Pension deferral
  2. It's a question that we frequently get asked about - what your options are and whether or not to defer it...* *More info here - Your State Pensions is not automatically activated; you need to tell the Pension Service what you intend to do once you receive your letter...
  3. Deferring your State Pension could increase the total amount you get when you claim it. However any extra payments you get from deferring could be taxed.
  4. Advantages
  5. If you opt to delay taking your pension, then it increases by 1% weekly, so long as you defer it for a minimum of 9 weeks. Over the course of a year, this would mean it would increase by almost 5.8% The extra amount is paid alongside your State Pension.
  6. If you defer for at least 12 months in a row, you can also claim a one-off lump sum payment. This will include interest of 2% above the Bank of England base rate. However - you’ll be taxed at your current rate on this lump sum. (So if you’re a basic rate taxpayer your lump sum will be taxed at 20%)
  7. Disadvantages
  8. The downside to delaying is that you're missing out on a year's income from your pension. So ask yourself - have you got enough set aside if you're thinking of doing this?
  9. Before making any major financial decisions involving your pension, it is best to seek financial advice if you do not feel confident or have more questions...
  10. The value of an investment may fall as well as rise. You may get back less than the amount invested. Taxation rules can change at any time and are dependent on individual circumstances. Reddington Wealth Management Ltd is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority.