Little-known state pension loophole which can boost your retirement payments by £667 a year – how to benefit

Thousands of retirees nearing the state pension age could boost their retirement benefits by £667 annually, thanks to a little-known loophole.

Currently, the full new state pension amounts to £221.20 per week, totalling £11,502.40 per annum.

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For most pensioners, it forms only part of their retirement income[/caption]

This full amount is available to those over the age of 66 who have accumulated at least 35 years of National Insurance (NI) contributions.

If you have fewer years of contributions, your pension will be reduced, and if you haven’t paid NI for at least 10 years, you won’t receive any state pension.

For most pensioners, it forms only part of their retirement income, as they could have other pots from a workplace pension, earning and savings. 

For most pensioners, the state pension constitutes only a portion of their retirement income, as they may also have funds from workplace pensions, earnings, and savings.

However, the state pension is not automatically paid upon reaching the age of 66.

Instead, you must claim it, but this is not compulsory.

Therefore, if you are still working or do not need the money immediately, opting to delay claiming your state pension can significantly increase your future income.

For every nine weeks you postpone claiming your pension, you will receive an additional 1%.

In practical terms, delaying your state pension by one year will increase your future payments by 5.8%, potentially adding up to an extra £667 annually.

Meanwhile, delaying for five years will add a whopping £3,333.20 to the annual sum you receive.

Of course, these figures are based on the current state pension amounts, but as this increases each year thanks to the triple-lock, the actual amounts you add are likely to be higher.

How much could you get?

	Weekly income	Annual income
Full state pension	£221.20	£11,502.40
Delay by one year	£234.02	£12,169.04
Delay by two years	£246.84	£12,835.68
Delay by three years	£259.66	£13,502.32
Delay by four years	£272.48	£14,168.96
Delay by five years	£285.30	£14,835.60

How to delay your state pension

You don’t need to do anything to delay your state pension, you simply don’t claim it.

The money will then be deferred until you apply to receive it.

When you want the money, you can make a claim at gov.uk. and the extra money will be added to your weekly payment.

Who is eligible to delay their state pension?

Most people can defer their state pension to get a bigger payout, but there are some exceptions.

Time spent in prison or when you or your partner get certain benefits does not count towards the nine-week deferrals.

You cannot build up extra State Pension during any period you get:

• Income support
• Pension credit
• Employment and support allowance (income-related)
• Jobseeker’s allowance (income-based)
• Universal Credit
• Carer’s allowance
• Carer support payment
• Incapacity benefit
• Severe disablement allowance
• Widow’s pension
• Widowed parent’s allowance
• Unemployability supplement

You cannot build up extra State Pension during any period your partner gets:

• Income support
• Pension credit
• Universal Credit
• Employment and support allowance (income-related)
• Jobseeker’s allowance (income-related)

What if I reached 66 before April 6, 2016

The rules are slightly different if you reached the state pension age before April 6, 2016.

Instead of getting a 1% increase for every nine weeks you delay, you get 1% for every five weeks that you don’t claim.

You can also choose to take the money in higher weekly payments or as a one-off lump sum.

When you claim your deferred State Pension, you’ll get a letter asking how you want to take your extra pension.

You’ll have three months from receiving that letter to decide what you want to do.