Yahoo News DWP deferring method could add £666 a year to some claims
Pensioners have the opportunity to boost their state pension by £666 annually through a straightforward method known as deferring. The Department for Work and Pensions (DWP) permits the delay of your pension, which means you can opt to accumulate it and enhance your future weekly payments instead of receiving it when initially entitled.
Upon reaching the pension age of 66, the DWP will contact you four months prior to your birthday with an invitation to claim. However, you can choose to make a "pension deferral" by deciding not to claim just yet.
Rupert Jones of The Guardian explained: "Let's say you are entitled to £221.20 a week (£11,502 a year), which is the current full rate for the new state pension. By deferring for 52 weeks, you will get an extra £12.82 a week, which adds up to an extra £666 a year for the rest of your life."
He added, "That's based on the current figures and assumes no annual increase in the state pension. In that example, you have given up £11,502 of income. That is a lot of cash and if the figures stayed the same it would take 17 years before you were better off deferring."
For those interested in deferring, there's no action required. Your pension will automatically be deferred until you decide to claim it, reports Wales Online.
Deferring your state pension could result in higher payments when you eventually claim it, but this is contingent on when you reached the age of 66.
Steve Webb, the former pensions minister who is now a partner at LCP, commented: "Whether or not deferral makes sense depends on your individual circumstances. Those who are in good health and can expect a long retirement may end up in profit if they put off taking their state pension and then draw an enhanced pension at a later date."
"And anyone planning to work past pension age might want to put off taking their state pension, as otherwise their pension will be added to their wages and taxed in full."
