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United Kingdom
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State pension deferral meaning
Published by a LexisNexis Pensions expert
What does State pension deferral mean?
State pension deferral describes a client’s choice, on or after reaching State Pension age, to postpone claiming the State Pension so as to receive a higher pension later (and, in limited cases, a lump sum). It is a descriptive term for options created by social security legislation and administrative guidance, rather than a defined statutory expression.
England & Wales, Scotland and Northern Ireland: If State Pension age was reached on or after 6 April 2016 (the new State Pension), deferral increases the weekly amount; there is no lump‑sum option. If reached before 6 April 2016 (the basic/additional State Pension), deferral can provide extra State Pension or, where deferral lasts at least 12 months, a taxable lump sum. Not claiming at State Pension age generally results in automatic deferral until the claim is made or backdated. Deferral interacts with income tax, means‑tested benefits and death/inheritance rules, and is relevant to retirement planning, financial remedies and estate administration.
Ireland: For the State Pension (Contributory), a flexible later‑claim option allows claiming after age 66 (up to age 70) for a higher weekly rate; no lump sum. Rules and rates are set out in social welfare legislation and Department of Social Protection guidance.
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View the related News about State pension deferral
NEWS
UK pensions update: TPR 2023/24 report, PPF levy deferral, TPO reforms, Virgin Media fallout, adequacy review delay, State Pension age response, and Law Commission scoping on pensions and divorce
In this issue: The Pensions Regulator The Pension Protection Fund The Pensions Ombudsman Scheme amendments Members and benefits Pensions and divorce Pensions Highlights 2024/2025 Daily and weekly news alerts Dates for your diary Trackers The Pensions Regulator The Pensions Regulator (TPR) has issued its annual report and accounts for 2023/24, signalling a reshaped approach and seizing a ‘unique opportunity’ to improve pension outcomes for savers. Over the year, TPR brought in more agile market supervision to reflect a landscape of fewer, larger schemes, enabling it to tackle emerging risks while backing innovation in savers’ interests. Twenty-five per cent of schemes were selected for intervention, relationship supervision covered 70% of memberships, and 11 million eligible jobholders have now been automatically enrolled into an automatic enrolment pension scheme. Ongoing consolidation creates scope for larger schemes to allocate to a broader mix of assets and secure better member outcomes, and TPR remains focused on protecting savers, strengthening...
19 December
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View the related Practice Notes about State pension deferral
PRACTICE NOTES
UK State Pensions: Basic, SERPS/S2P, Graduated and New State Pension: SPA changes, entitlement, qualifying years, NI credits, contracting-out, deferral, overseas uprating and Brexit
Brexit impact The UK ceased to be an EU Member State on exit day, 31 January 2020. Under the Withdrawal Agreement, the state pension and benefit rights of UK nationals residing in the EU, European Economic Area (EEA) or Switzerland are protected. See: Benefits and pensions for UK nationals in the EU, EEA or Switzerland. Likewise, information on the entitlements of EEA and Swiss citizens to UK benefits and state pensions is set out at: Benefits and pensions for EEA and Swiss citizens in the UK. State pensions A state retirement pension depends on an individual’s National Insurance (NI) contribution record and may consist of up to three elements: the basic old age pension the State Second Pension (S2P—formerly the State Earnings Related Pension Scheme, SERPS) the graduated pension Payments are generally made gross, with tax collected through Pay As You Earn (PAYE) against a person’s other income, such as an occupational or private pension. Income tax can also...
22 May
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