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BBC Money Box on deferring your state pension

The Department for Work and Pensions (DWP) has released figures showing that the State Pension is currently supporting 12.7 million older individuals across the UK, with over one million of these retirees residing in Scotland.

To be eligible for this regular financial support, one must have reached the UK Government’s retirement age of 66 for both men and women and have contributed at least 10 years’ worth of National Insurance Contributions.

Yet those on the cusp of retirement might not realise that the State Pension doesn’t land in their bank accounts by default.

It’s a contributory benefit that must be actively claimed, or new pensioners risk waiting longer for their initial weekly sum of up to £221.20, or the four-weekly payment of £884.80.

It’s important to note that reaching the State Pension age doesn’t automatically trigger payments – some opt to delay their claim to continue working and increase their pension savings, particularly if they haven’t hit the full 35 years of National Insurance Contributions or were ‘contracted out’.

Senior woman using a laptop and looking worried

State Pension is currently supporting 12.7 million older individuals across the UK (Image: Getty)

The DWP advises: “You do not get your State Pension automatically – you have to claim it. You should get a letter no later than two months before you reach State Pension age, telling you what to do.”

The guidance further explains that you have the option to either claim your State Pension or delay (defer) claiming it. It notes: “If you want to defer, you do not have to do anything. Your pension will automatically be deferred until you claim it.”

This implies that if you don’t reply to the letter confirming your desire to start receiving State Pension, no payments will be made as the DWP will assume you wish to defer.

By deferring your State Pension, you could boost the amount you receive weekly when you eventually claim it, provided you defer for a minimum of nine weeks. The increase is equivalent to 1 percent for every nine weeks you defer, which equates to just shy of 5.8% for an entire year.

The additional sum is included with your regular State Pension payment, but bear in mind that any extra money from deferral may be subject to tax.

It’s also crucial to note that deferred State Pensions rise annually based on the September Consumer Price Index (CPI) inflation rate, rather than the highest measure of the Triple Lock policy.

New State Pension payment rates for the fiscal year 2024/25 are set at a full payment rate of £221.20, which amounts to £884.80 every four weeks.

For the Basic State Pension in 2024/25, the full rate for Category A or B is £169.50, totalling £678.00 every four weeks.

Details regarding your first payment are also included.

Your first payment will be within five weeks of reaching State Pension age and you will get a full payment every four weeks after that. You might get part of a payment before your first full payment.

The letter will tell you what to expect.

You can also choose to receive your State Pension payments weekly or fortnightly which will result in a shorter delay for the first payment.

The day your State Pension is paid depends on your National Insurance number.

Last two digits of your National Insurance number:

00 to 19 – paid on a Monday.

20 to 39 – paid on a Tuesday.

40 to 59 – paid on a Wednesday.

60 to 79 – paid on a Thursday.

80 to 99 – paid on a Friday.

DWP ‘starting amount’ for the new State Pension.

If you have qualifying years on your National Insurance record as at April 5, 2016, DWP works out a ‘starting amount’ for you for the new State Pension.

It is the higher of either:

– the amount you would have got under the previous State Pension system up to 6 April 2016, or.

– the amount you would get on your record to 6 April 2016 if the new State Pension had been in place at the start of your working life.

Anxious senior man managing finances, holding cash

The day your State Pension is paid depends on your National Insurance number (Image: Getty)

Both amounts reflect any periods when you were contracted out of the Additional State Pension. Your ‘starting amount’ could be less than, more than or equal to the full new State Pension.

If your ‘starting amount’ is less than the full amount of the new State Pension for every ‘qualifying year’ you add to your National Insurance record after April 5, 2016, a certain amount (approximately £6.32 a week, this is £221.20 divided by 35) will be added to your ‘starting amount’, until you reach the full amount of the new State Pension or you reach State Pension age, whichever comes first.

If your ‘starting amount’ exceeds the full amount of the new State Pension you’ll receive this higher amount when you hit State Pension age. It’s possible to have a starting amount that’s more than the full new State Pension if you’ve got some Additional State Pension.

The difference between the full new State Pension and your ‘starting amount’ is known as your ‘protected payment’.

If your ‘starting amount’ matches the full new State Pension, you’ll receive the full new State Pension when you reach State Pension age.

You can obtain a State Pension forecast online from the Check your State Pension service here. This provides personalised information, including your State Pension age, an estimate of how much State Pension you may get at that point and if you can increase this amount.

It also allows you to view your National Insurance contribution history.

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