Fidelity: Savers miss out over failure to defer state pension


Less than one in ten savers are taking advantage of bonuses for deferring their state pension, data from Fidelity reveals.

According to a freedom of information request submitted by the firm, 92 per cent of those starting to draw their state pension in the six months to February 2014 were doing so at their first opportunity.

Retirees can receive a 1 per cent uplift in their state pension income for every five weeks of deferral, equivalent to a 10.4 per cent increase for a year.

Fidelity suggests 60 per cent of retirees have sufficient savings to fund some kind of deferral, with a year estimated to require a nest egg of £6,970, and a two-year deferral generating an additional £18,800 over the lifetime of a retiree.

Fidelity retirement director Alan Higham says awareness of the option to defer needs to be raised, particularly in light of pension freedoms.

He says: “The new pension freedoms would now allow someone to suspend or defer taking their state pension for many years whilst they draw down on their private pension and this option should be discussed with people as they are given guidance on their pension choices.

“It won’t be suitable for everyone (especially those with seriously poor health) but given the very low numbers of people choosing this option, there is a big job to be done in raising public awareness.”