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 £241.30/week in 2026/27:
| Deferral period | Extra per week | Extra per year | New weekly pension |
|---|---|---|---|
| 6 months | £6.97 | £362 | £248.27 |
| 1 year | £13.94 | £725 | £255.24 |
| 2 years | £27.88 | £1,450 | £269.18 |
| 3 years | £41.83 | £2,175 | £283.13 |
| 5 years | £69.71 | £3,625 | £311.01 |
Figures use the actual rule, 1% for every 9 weeks deferred (just under 5.8% a year). GOV.UK’s own examples round this to 5.8%, which gives slightly higher figures. Nothing is added until you’ve deferred for at least 9 weeks.
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 × £241.30/week) | £12,547.60 |
| Extra pension per year after deferral | £725 |
| Break-even point | ~17.3 years |
If you defer at 67 and start claiming at 68, you need to live to approximately 85 to break even. Every year beyond that, you’re roughly £725/year better off.
Break-Even by Deferral Length
| Deferral | Pension foregone | Extra annual income | Break-even age (from 67) |
|---|---|---|---|
| 1 year | £12,547.60 | £725 | ~85 |
| 2 years | £25,095.20 | £1,450 | ~86 |
| 3 years | £37,642.80 | £2,175 | ~87 |
| 5 years | £62,738.00 | £3,625 | ~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 | Your State Pension would be taxed at your marginal rate; deferring means taking a higher pension later, when your tax rate may be lower |
| 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 and your State Pension share one Personal Allowance, so the rate your pension is taxed at depends on your total income (rates for England, Wales and Northern Ireland; Scotland’s bands differ):
| Your earnings | Tax on your State Pension | Argument for deferral |
|---|---|---|
| Under £12,570 | Partly covered by what’s left of your Personal Allowance; the rest at 20% | Weaker |
| £12,570 to about £37,722 | 20% | Moderate: deferring avoids 20% tax |
| About £37,722 to £50,270 | Partly 20%, partly 40% (the pension takes you over £50,270) | Moderate to strong |
| £50,270 to about £87,452 | 40% | Strong: deferring avoids 40% tax |
| About £87,452 to £100,000 | Partly 40%, partly up to 60% effective (the pension takes you over £100,000) | Very strong |
| £100,000 to £125,140 | Up to 60% effective, as the Personal Allowance is withdrawn | Very strong |
Example: Higher Rate Taxpayer
Jo earns £60,000 at age 67 and lives in England. If she claims her full State Pension (£12,547.60/year), she’d pay 40% tax on it, losing around £5,019. She keeps roughly £7,529.
If she defers for 2 years until she retires at 69, she avoids around £10,038 in tax across 2 years and receives a higher pension (£269.18/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 |
You also can’t build up extra State Pension for any period when you get Pension Credit, income-related Employment and Support Allowance, Universal Credit, Carer’s Allowance, Carer Support Payment, Incapacity Benefit, Severe Disablement Allowance, Widow’s Pension, Widowed Parent’s Allowance or Unemployability Supplement, or when your partner gets Pension Credit, Universal Credit or income-related Employment and Support Allowance. Time in prison doesn’t build it up either. If you’re getting benefits and want to defer, tell the Pension Service. 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)
Backdating, Stopping and Restarting
Backdating. When you do claim, you can ask for up to 12 months of backdated payments. You get those weeks at the ordinary rate, and the backdated weeks no longer count as deferred, so your ongoing increase is worked out on the shorter period. For example, if you defer for two years and then claim with 12 months backdated, you get a year of arrears and an ongoing pension increased for one year of deferral, not two.
Stopping after you’ve started claiming. If you are already receiving your State Pension, you can ask the Pension Service to stop the payments and defer from then on, earning the same increase for as long as you leave it unclaimed. You can only do this once.
If You Reached State Pension Age Before 6 April 2016
The old rules were more generous. Your pension increased by 1% for every 5 weeks you deferred (about 10.4% a year), and if you deferred for at least 12 months in a row you could choose a one-off taxable lump sum instead, with interest at 2% above the Bank of England base rate. Neither option is available to anyone who reached State Pension age on or after 6 April 2016. If you are still deferring under the old rules, get guidance before you claim: which option is better depends on your tax position and health.
Deferral and Care Home Fees
Deferring doesn’t reduce what a council counts as your income in a care home financial assessment. Councils can treat the State Pension you are entitled to as income even if you haven’t claimed it, so deferring to keep your assessed income down doesn’t work.
Deferral and Inheritance
If you die while deferring:
- If you reached State Pension age before 6 April 2016, your surviving spouse or civil partner can usually inherit your extra State Pension (as long as they don’t remarry before their own State Pension age)
- If you reached State Pension age on or after 6 April 2016, the extra you built up by deferring can’t be inherited
- Under the old rules it may be paid as a weekly increase or, in some cases, a lump sum
See our State Pension Inherited by Spouse guide for details.