People could receive a lump sum worth up to £30,000 if they defer taking of State pension benefits for at least five years, says the DWP, or around 7.5% extra for every year they delay claiming.
This increment is designed to increase to 10.4% from 2010 for every year benefits are deferred, but the government has instead proposed to start this increased rate from 2005, to give pensioners a larger weekly pension.
At present, pensioners can only defer receiving their State pension entitlements for a maximum of five years, so the government is removing the limit for anyone who chooses to continue or go back to work.
Anyone who defers for at least one year will receive all the State pension due, plus extra interest before receiving the normal State pension entitlement.
Table shows examples of different State Pension levels/gains on deferral or lump sum
|Type of Pension||Underlying amount at point of claim||Years of Deferral||Lump Sum Accrued||Increment to State Pension|
|Category B Pension from Spouse's contributions||£46.35||£2,410.2||1||£2,483||£4.82||£251|
|Category A Pension from own contributions||£77.45||£4,027.4||1||£4,149||£8.05||£419|
|Category A With additional State pension||£77.45||£4,027.4||1||£4,149||£8.05||£419|
|Figures are in 2003/4 price terms and shown gross of tax. Lump sum based on illustrative rate of 6% pa|
Consumers are likely to require advice when choosing whether to defer claiming their State entitlement as the DWP points out people will need to consider their individual circumstances before making such a decision.IFAonline
The chairman worries about finance getting in touch with its feelings
Cost of acquisition: £31m
Greg Camm temporary replacement
Plan ahead … do not rush
Adviser use of social media on the up