Deferring your state pension means choosing not to claim it when you reach State Pension age. In return, you get a higher weekly amount when you do eventually claim. Here’s whether it’s worth it.
Read more: See our State Pension guide for a complete overview of this topic.
How State Pension Deferral Works
When you reach State Pension age, your pension doesn’t start automatically — you have to claim it. If you don’t claim, it’s deferred by default.
| Pension type | Deferral rate | Equivalent annual increase |
|---|---|---|
| New State Pension (from 6 April 2016) | 1% per 9 weeks | ~5.8% per year |
| Old Basic State Pension (before 6 April 2016) | 1% per 5 weeks | ~10.4% per year |
The old system was significantly more generous for deferral. If you reached State Pension age before April 2016, you may also have the option of a taxable lump sum instead of a higher weekly rate.
How Much Extra You Get
Based on the full new State Pension of £230.25/week in 2026/27:
| Deferral period | Extra per week | Extra per year | New weekly pension |
|---|---|---|---|
| 6 months | £6.68 | £347 | £236.93 |
| 1 year | £13.35 | £694 | £243.60 |
| 2 years | £26.71 | £1,389 | £256.96 |
| 3 years | £40.06 | £2,084 | £270.31 |
| 5 years | £66.77 | £3,472 | £297.02 |
There is no maximum deferral period. You can defer for as long as you want.
The Break-Even Calculation
The question is: does the extra weekly amount make up for the pension you gave up during the deferral period?
One Year Deferral Example
| Factor | Amount |
|---|---|
| Pension foregone (1 year × £230.25/week) | £11,973 |
| Extra pension per year after deferral | £694 |
| Break-even point | 17.2 years |
If you defer at 67 and start claiming at 68, you need to live to approximately 85 to break even. Every year beyond 85, you’re £694/year better off.
Break-Even by Deferral Length
| Deferral | Pension foregone | Extra annual income | Break-even age (from 67) |
|---|---|---|---|
| 1 year | £11,973 | £694 | ~85 |
| 2 years | £23,946 | £1,389 | ~86 |
| 3 years | £35,919 | £2,084 | ~87 |
| 5 years | £59,865 | £3,472 | ~89 |
The longer you defer, the later the break-even point. This is because you’re giving up more years of pension upfront.
When Deferral Makes Sense
| Situation | Deferral recommended? | Why |
|---|---|---|
| Still working at 67 with good income | Often yes | State pension would be taxed at your marginal rate; deferring builds a higher tax-free-of-NI income later |
| In good health, family longevity | Yes | Higher chance of exceeding break-even age |
| Have other retirement income | Possibly | Depends on tax position |
| Need the income now | No | Take the pension — you need it |
| Poor health or low life expectancy | No | Unlikely to reach break-even |
| Claiming means-tested benefits | Check carefully | State pension income could reduce benefits like Pension Credit |
Tax Implications of Deferral
State pension is taxable income. If you’re still working when you reach State Pension age:
| Your earnings | Tax on state pension | Argument for deferral |
|---|---|---|
| Under £12,570 | 0% (within Personal Allowance) | Weaker — pension isn’t taxed anyway |
| £12,570–£50,270 | 20% basic rate | Moderate — deferring avoids 20% tax |
| £50,270–£125,140 | 40% higher rate | Strong — deferring avoids 40% tax |
| Over £100,000 | Up to 60% effective | Very strong — loss of Personal Allowance |
Example: Higher Rate Taxpayer
Jo earns £60,000 at age 67. If she claims her full State Pension (£11,973/year), she’d pay 40% tax on it — losing £4,789 to tax. She keeps only £7,184.
If she defers for 2 years until she retires at 69, she avoids £9,578 in tax across 2 years and receives a higher pension (£256.96/week) when she does claim — likely at a lower tax rate.
Deferral and Means-Tested Benefits
If you’re claiming or might claim means-tested benefits, deferral can backfire:
| Benefit | Impact of deferral |
|---|---|
| Pension Credit | Deferred pension is treated as notional income — you’re deemed to receive it even if you don’t |
| Housing Benefit | Same — notional income rule applies |
| Council Tax Reduction | Same — notional income rule applies |
If you’re eligible for Pension Credit, claiming your state pension is almost always better than deferring.
How to Defer
You don’t need to do anything to defer — simply don’t respond to the claim invitation letter from DWP. Your pension defers automatically.
To start claiming after deferral:
- Call the Pension Service on 0800 731 7898
- Or claim online at gov.uk/get-state-pension
You can choose to:
- Start receiving the higher weekly amount going forward
- Claim up to 12 months backdated as a lump sum (at the original rate, not the enhanced rate)
Deferral and Inheritance
If you die while deferring:
- Your surviving spouse or civil partner may be able to inherit your deferred State Pension increase
- Under the new State Pension, the rules are complex and depend on when you reached State Pension age
- The inherited amount may be paid as a lump sum or ongoing increase
See our State Pension Inherited by Spouse guide for details.