View more on these topics

Advisers: Govt has ‘killed off’ state pension deferrals


Advisers say the Government has “killed off” state pension deferment following the decision to slash the incentive for delaying taking the benefit.

Last week, pensions minister Steve Webb set out plans to halve the extra state pension people receive when they defer retirement in a move which will save the Government £300m a year.

Currently, the Government encourages people to delay taking their state pension by increasing the payment by around 10 per cent a year for each year after state pension age.

Webb says there is little evidence the incentive encourages people to work longer and has tabled an amendment to the Pensions Bill which would reduce the annual deferral increase to around 5 per cent a year from April 2016 onwards.

The Department for Work and Pensions estimates the change will save the Government £200m a year in 2020 and £300m a year in 2030.

Rowley Turton director Scott Gallacher says: “This will kill off state pension deferment because it will take 20 years to get your money back.

“It will also cost the Government money in the short term because more people will take their state pension when they reach state pension age.”

Worldwide Financial Planning IFA Nick McBreen says: “There may be limited circumstances where deferring taking your state pension still makes sense but these will be few and far between.”


News and expert analysis straight to your inbox

Sign up


There are 3 comments at the moment, we would love to hear your opinion too.

  1. Why pay people to defer when the Govt can force people to defer without cost by putting SPA up to 70

  2. Will there now be an avalanche of people currently entitled to ask for their state pension to commence immediately, rushing to take their pensions now on the ‘old’ terms?

    The way that the state accounts for its pensions could mean that government will face a hike in pension costs.

  3. “This will kill off state pension deferment because it will take 20 years to get your money back”.

    I know this article relates to the State Pension however the above statement is what is leading to the public no longer choosing private pensions as their main source of retirement savings.

    People want more control over what they see as their money.

    Less Government intervention in life.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm