State pension update as millions miss out on huge £694 boost | Personal Finance | Finance

New analysis suggests a two thirds of people aged 40-65 weren’t aware of an option to delay taking the State Pension, and could be missing out on a financial boost of nearly £700. Retirement specialist Just Group pored through recent data put out by Department for Work and Pensions (DWP), revealing that 66% of those in that age group said they didn’t known there was an option to defer taking the pension beyond the State Pension age, which is currently 66.

Depending on your circumstances, the move could be hugely beneficial. Those eligible for the New State Pension (on or after April 6, 2016) can get “a 1% increase in their weekly State Pension for every nine weeks that payments are deferred, this works out at just under 5.8% for every full year you put off claiming”, according to the UK Government website.

“After you claim, the extra amount you get because you deferred will usually increase each year in line with inflation,” it adds.

The triple lock is raising the new State Pension to £230.25 a week this year. It means those who delay payments for the 2025/26 financial year will get an additional £13.35 a week, as reported by IFA Magazine.

This means people could get an extra £694.20 of income every year for life, as well as any increases linked to inflation, as per the outlet.

According to Just Group, those who reached retirement age before April 6, 2016, but opted to delay claiming the basic state pension, can get even more.

People in this situation get an additional 1% of State Pension income for every five weeks deferred. This amounts to an annual rise of 10.4 per cent or £954.20.

This can be taken as either lump sump or additional income.

Just Group says of the 34% aware they could delay, 33% were unsure of what the impact deferring would have on their regular payments. Meanwhile, an additional 8% thought they would get the same amount or less.

The data suggests one in 10% of adults aged 66-75 said that they had deferred receiving the State Pension.

49% of those who did said they didn’t need it as soon as they reached State Pension age, and 48% saying they were attracted to getting the higher income later.

20% also said they didn’t want to start claiming it until they had stopped working.

Stephen Lowe, group communications director at the retirement specialist, Just Group, said: “Deferring your State Pension is effectively a trade-off between receiving your full State Pension payments today or an increased State Pension later. Delaying the State Pension may not work for everybody but it’s certainly an option worth knowing about and exploring in more detail for those people who don’t need the money immediately. If you’re still working, deferring could help reduce your income tax bill in the short term and boost your pension income in later years when it may be needed more.

“The decision requires careful thought. It takes around 17 years to break even if you defer the State pension for a year so health and life expectancy are key considerations when weighing up whether you could benefit. Currently, any extra income accrued through deferring the State Pension offers protection against inflation – a valuable safeguard for those planning for a long retirement.

“Anyone who is unsure of their options can find further guidance from a range of sources. The Government’s free and impartial Pension Wise service is a good place to start while regulated financial advice remains the gold-standard.”