State pensioners born after 1951 can add up to £694 extra to their pension thanks to a little-known rule – but it means delaying retirement by a whole year. Men born on or after April 6, 1951, and women born on or after April 6, 1953, can claim the new State Pension once they reach State Pension age, which is currently 66.
If you’re born before these dates you’ll get the basic State Pension instead. But once you turn 66 your State Pension isn’t automatically given to you – you have to claim it from the Department for Work and Pensions (DWP).
The DWP should send you a letter aking if you want to either claim your State Pension, or defer it, no later than two months before you reach State Pension age. If you want to get it straight away then you can claim it, but if you’d rather defer it then you don’t have to do anything – your pension will automatically be delayed until you decide to claim it.
While many will be eager to claim their pension as soon as they can, deferring it can be a tempting option as it allows you to add some extra cash to your retirement savings, up to £694.20 if you delay it for a whole year.
If you reach State Pension age on or after April 6, 2016, then your pension pot will increase every week you defer, providing you defer for at least nine weeks. Currently, for every nine weeks you defer, your State Pension will increase by 1%. This works out as just under 5.8% for a whole year, or £694.20.
The new State Pension is currently worth £230.25 per week if you get the full rate. So by opting to defer for 52 weeks, you can get up to £13.35 extra per week – amounting to £694.20 over a year.
Of course, not everyone is eligible to get the full new State Pension rate of £230.25 so if you get less than this then you might need more National Insurance qualifying years to boost your weekly payments.
If you’re on the new State Pension you need at least 10 qualifying years on your National Insurance record to get any new State Pension and you usually need 35 qualifying years to get the full amount.
Those who are entitled to the full amount will benefit from a £470 boost per year after the new State Pension was uprated by 4.1% in April at the start of the new tax year.
The DWP said: “With uprating in effect, pensioners receiving the full basic State Pension will see their weekly payments rise from £169.50 to £176.45 per week, worth an additional £360 a year. In addition, the full rate of the new State Pension will increase from £221.20 to £230.25 per week, an increase of £470 a year.”
Minister for Pensions Torsten Bell added: “Raising the State Pension and rescuing the NHS – these are this government’s priorities to give all pensioners the dignity they deserve in their retirement. Those who have worked hard throughout their lives, paying into the system, are owed nothing less.
“We’re improving the lives of millions of pensioners through our £7.84 billion additional funding for the State Pension this year. That means up to £470 extra in pensioners’ pockets from this week and comes alongside our work to boost Pension Credit uptake, and the £26 billion we’ve invested in the NHS that has seen waiting lists in England fall for 5 months in a row.”
