Understanding the Deferral of State Pension in 2025/26
The deferral of state pension remains an effective way to increase your retirement income if you don’t need to claim immediately.
With 2025/26 updates now in effect, understanding the benefits, rules, and tax implications can help you make an informed decision.
What Is the Deferral of State Pension?
The deferral of state pension means delaying your pension payments beyond your state pension age in exchange for higher weekly payments later.
As of 2025/26, for every nine weeks you defer, your pension increases by 1% — roughly 5.8% for a full year’s deferral.
Who Can Benefit from Deferring?
If you have enough qualifying years (currently 35 for the full amount), you may choose to defer.
For those still working or with other income sources, deferring the state pension can be a practical way to enhance your later income while potentially avoiding higher tax during working years.
Tax Implications of State Pension Deferral
Your deferred state pension is taxable when you start receiving it.
Unlike the pre-2016 rules, you can no longer opt for a lump sum; instead, the increased pension is added to your regular weekly payments.
For 2025/26, the full single-tier pension is £233.10 per week, up from previous years.
Older Rules: Before 6 April 2016
If you reached state pension age before 6 April 2016, the rules differ.
You could take your deferred state pension as a lump sum (after at least 12 months) or as increased weekly payments.
The increase rate was 10.4% per year, and lump sums attracted tax based on your marginal rate.
Should You Defer Your State Pension?
Deferring isn’t right for everyone. Factors like your health, financial situation, and expected longevity matter.
While the deferral of state pension can enhance long-term income, it may not suit those needing funds immediately or with shorter life expectancies.
How Trueman Brown Can Help On The Deferral Of State Pension
At Trueman Brown, our experienced accountants in Upminster provide clear guidance on the deferral of state pension and its implications for your tax and retirement planning.
We help you assess whether deferral aligns with your broader financial goals.
📧 mark@truemanbrown.co.uk
📞 01708 397262
Frequently Asked Questions About The Deferral Of State Pension (FAQ)
Q1. How much extra will I get for deferring my state pension?
You’ll receive approximately 5.8% more for each year you defer under the post-2016 rules.
Q2. Can I still take my deferred pension as a lump sum?
No. Lump sums only apply to those who reached state pension age before 6 April 2016.
Q3. Is my deferred pension taxable?
Yes, your deferred state pension is taxable when paid.
Q4. What is the full state pension for 2025/26?
For 2025/26, the full single-tier pension is £233.10 per week.
Q5. Should I seek advice before deferring?
Absolutely. Professional guidance ensures your choice fits your financial circumstances.
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