Britons could boost their state pension by £614 a year

The new state pension will increase every week someone defers, as long as they defer for at least nine weeks.

The state pension increases by the equivalent of one percent for every nine weeks deferred which works out as just under 5.8 percent for every 52 weeks.

The extra amount is paid with someone’s regular state pension payment.

For example, if an individual gets £203.85 a week (the full new state pension), by deferring for 52 weeks, they will get an extra £11.82 a week (just under 5.8 percent of £203.85.

This example assumes there is no annual increase in the state pension. If there is an annual increase, the amount someone could get could be larger.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown discussed the benefits of deferring the new state pension for those who still wish to work after turning 66.

She said: “When the then Prince Charles celebrated his 65^th birthday he became a “pension-heir” able to claim his state pension. 

“Few of us are wealthy enough to be able to afford to donate our state pension to charity but if you are like the King and still working and don’t need the money straightaway, you could get more from this all-important benefit by deferring claiming it.

“You do not receive your state pension automatically when you hit state pension age – you have to claim it. For every nine weeks you defer you will receive the equivalent of one percent extra.

“This works out as just under 5.8 percent for every 52 weeks. So, if you were entitled to a full new state pension which is currently around £10,600 per year, you could get an extra £614 by deferring for a year.

“If you don’t need the extra money straightaway, then this could be a handy way of boosting how much you get when you actually do decide to leave work.

“However, you must be careful that by deferring you don’t affect your entitlement to other benefits you could receive such as Pension Credit.”

The “best way” of making the most of the state pension is to make sure one can claim as much as they can. 

Individuals need 35 years’ worth of National Insurance credits to get a full new state pension. However, many people have gaps in their record due to time spent out of the workforce.

To check how many years are on one’s National Insurance record, they can get a state pension forecast on the Government website which will tell someone how much they are on track to get and let them know if they have any gaps.

Ms Morrissey encouraged Brirons to check if they can still claim National Insurance credits for the periods they missed years on their NI record. Examples include Child Benefit and Universal Credit. If this is the case, people may be able to backdate a claim.

If individuals are unable to do this, then they have the option of plugging the gaps by buying voluntary National Insurance credits. 

A full year costs just over £907 – partial years will be cheaper -and for each year someone buys, they can get an extra 1/35th state pension – which is just over £300.

She explained that if people live at least three years after their state pension age – which is currently 66 in the UK – they could get their money from the top-ups back via the boosted state pension.

As part of transitional arrangements introduced alongside the new state pension from April 2013, individuals were given until April 5, 2023, to pay voluntary NICs to make up any gaps in their NI record between April 6, 2006, and April 5, 2016. This deadline has now been extended to July 31, 2023.

Ms Morrissey concluded: “It is really important to check with DWP whether you will benefit from buying voluntary credits as there may be cases – for instance where you are contracted out – where buying the extra credits does not boost your state pension.”