Deferring your State Pension
Did you know that if you reach pension age from 6 April 2016 you get an extra 1% added to your pension for each nine weeks you defer?
So each years' delay enhances your pension by a shade under 5.8%. A one year delay will increase a £120 a week pension to £127 and a five year delay to less than £155. The new rules do not allow you to take a lump-sum.
Is it worth it?
During those years of deferring you do not get your pension.
If you defer a year and give up £120 a week you will have lost £6,240 in pension you did not draw. So you will have to live quite a while to get that amount back from the higher pension. But as life expectancy at 65 is around 20 years most people will gain from deferring for a year.
The arithmetic is much the same for a five year delay. You need another ten years of life to make a profit. Most men will live longer than that, and most women will live longer still. On the other hand if you defer until you are 90 you will get an enormous weekly pension but you probably won’t draw it for very long if at all. So you will end up with less pension over your lifetime.
For an average man the optimum time to defer is five years. By doing that he will get the equivalent
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