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DWP announces new rules on state pension deferral

The Department for Work and Pensions has announced its new rules on state pension deferral, effective from April 7.

People choosing to defer their state pension can now opt for a one-off taxable lump sum or a weekly increase, when they do decide to claim.

In order to be eligible for the lump sum option, people must defer for at least 12 months. It will be based on the amount of weekly state pension that would have been received, with an interest rate at 2 per cent above the Bank of England base rate.

Under the lump sum option, the weekly pension will be paid at the normal rate.

To be eligible for the weekly increase, people must defer for at least five weeks. This will increase by 1 per cent for every five weeks deferred.

The a maximum five years a state pension can be put off for has been removed, so pensions can now be deferred for as long as required.

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