While many start drawing their government state pension as soon as it becomes available in the UK, other Britons may opt to defer it.
There is no legal requirement to take the pension at state pension age, which is currently 66 for both men and women. However, if left unclaimed, the pension will be deferred automatically. Read on to learn why some people choose to do so.
Deferred pension increases
Until the state pension is claimed, the deferred pension increases each week, once it has been deferred for a minimum of nine weeks. The current rate of increase equates to a 1 per cent hike every nine weeks, which works out to a little less than 5.8 per cent per annum. For instance, should you defer the state pension at its current rate of £203.85 per week for a total of 52 weeks, you’d receive £11.82 extra a week after you started taking it.
Key consideration when deferring state pensions
It’s important to remember that while a deferred pension will be paid at a higher rate, it will also be paid out for a shorter time because it began later. As a result, it can take a considerable time for extra payments to start to overtake the loss of your full pension during the deferred period. Before making the choice to defer your pension, consult an advisor to ensure it is in your best interest.
Contact us today at Hartey Wealth Management for expert financial advice in Chester.