State pension age people may be able to increase amount by opting to defer | Personal Finance | Finance

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The state pension is linked to a person’s National Insurance record, so it may be filling in any gaps on this record can increase the amount. Examples of this include making National Insurance contributions, or claiming National Insurance credits.

This is something which parents and guardians can do for children who are under the age of 12, via a Child Benefit claim.

The Specified Adult Childcare Credit, meanwhile, means family members who care for a child under 12 while their parents work, may be able to get the credit.

It can be backdated up to 2011, and is potentially worth extra state pension of as much as £2,340 per year.

Claiming Carer’s Allowance or Carer’s Credit could also aid some people with boosting their state pension entitlement.

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Ways to increase the state pension is a topic which Kay Ingram, Director of Public Policy at financial planning group LEBC, has spoken on at length.

Among her suggestions, the chartered financial planner pointed out there is also the option to delay starting the state pension.

Speaking in November last year, she said: “While the State Pension is payable from age 66 and earlier for those who qualified before this year, payment can be delayed, and in this scenario the annual pension will be increased.

“This could be worthwhile if still working, paying tax at higher rates and with an expectation of a long lifespan.

“Different rules apply, depending when entitlement started, with those born before 6th April 1951 (men) and 1953 (women) offered a better deal.”

When a person reached state pension age affects the amount of extra state pension they could get.

Reaching state pension age on or after April 6, 2016

For those in this situation, the state pension increases every week it is deferred, provided the person defers for at least nine weeks, the government website states.

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For every nine weeks deferred, the state pension increases by the equivalent of one percent.

This works out at just under 5.8 percent for every 52 weeks, and the extra amount is paid with the regular state pension payment.

Reached state pension age before April 6, 2016

Those in this situation will usually be able to either take their extra state pension as higher weekly payments, or as a one-off lump sum.

When it comes to claiming the deferred state pension, people will receive a letter which asks them how they want to take their extra pension.

They will then have three months from receiving the letter to decide.

Lump sum payment

If a person defers claiming their state pension for at least 12 months in a row, then they can get a one-off lump sum payment.

It will include interest of two percent above the Bank of England base rate, the government explains.

“You’ll be taxed at your current rate on your lump sum payment,” the government website warns.

“For example, if you’re a basic rate taxpayer your lump sum will be taxed at 20 percent.”





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