How to boost your state pension for free with 1% trick and get £700 extra a year

The Sun

2 days ago

SOON-TO-BE retirees can boost their state pension for free and get up to nearly £700 extra a year with a simple trick.
Many apply for the state pension as soon as they reach the eligible age of 66 (which will rise to 67 by the end of 2028), but if you delay your claim, you could get higher payments.
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You can get an extra 1% for every nine weeks that you delay your claim. That means that for every year you delay, you boost your payout by just under 5.8 per cent.
'Deferring your state pension can be a sensible option if you don't need the income immediately and want to boost the payments you receive later in retirement,' said Jon Greer from the investment platform Quilter.
How much will you get?
The full new state pension is worth £230.25 a week. That means that over the full 2025-26 tax year, you could boost your payments by about £13.35 a week, which is about £694.20 a year, according to Quilter.
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.
The boosted amount increases each year based on the Consumer Price Index.
You may want to consider deferring your state pension if you don't urgently need it, such as if you are still in work.
Deferring your pension also has tax benefits, said former pensions minister Steve Webb, who now works at the pensions consultancy LCP. 'Drawing a pension alongside a wage can mean a lot more of your pension is taxed - even potentially at a higher rate - than if you wait until your earnings have stopped.'
However, there are risks to consider, said Tom Selby from the investment platform AJ Bell.
He said: 'If you die earlier, you might not recoup the state pension income you gave up in return for the increase, so if you have health issues then deferral might not be the best option.'
Deferring the state pension could be a big mistake for those eligible to claim Pension Credit - which is a handy benefit worth up to £3,900, which also unlocks the Winter Fuel Payment, worth up to £300.
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That's because your boosted state pension payments could tip you over the threshold for Pension Credit, which is £227.10 if you are single, or a joint income of £346.60 if you have a partner. If you get the full new state pension, you are already over this threshold.
It would take about 17 years to make back a year of the state pension payments lost by deferring, although this does not factor in future state pension rises.
Who is eligible?
Most people can defer their state pension, 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)
The rules are different if you reached your state pension age before April 6, 2016.
Instead of a 1% increase for every nine weeks you delay, you get 1% for every five weeks that you don't claim, and you will be given a choice over how to receive your boosted state pension amounts.
You can either choose to get higher weekly payments, or you can opt for a one-off lump sum (although this is only an option if you deferred for at least 12 months in a row).
The lump sum payment also includes interest of 2 per cent above the Bank of England base rate, which would be 6.25 per cent.
If you choose to get a lump sum fixed payment, consider putting it in a high interest savings account.
If you're planning on not touching your state pension until at least another five years, consider investing it to make your money work as hard as you can.
How to delay
You don't need to do anything to delay your state pension - you simply just don't claim it.
When you want the money, you can make a claim on the gov.uk website.
The Department for Work and Pensions will then add the boosted amount onto your payments.
The DWP should send you a letter no later than two months before you reach state pension age explaining how to claim it.
How does the state pension work?
AT the moment the current state pension is paid to both men and women from age 66 - but it's due to rise to 67 by 2028 and 68 by 2046.
The state pension is a recurring payment from the government most Brits start getting when they reach State Pension age.
But not everyone gets the same amount, and you are awarded depending on your National Insurance record.
For most pensioners, it forms only part of their retirement income, as they could have other pots from a workplace pension, earning and savings.
The new state pension is based on people's National Insurance records.
Workers must have 35 qualifying years of National Insurance to get the maximum amount of the new state pension.
You earn National Insurance qualifying years through work, or by getting credits, for instance when you are looking after children and claiming child benefit.
If you have gaps, you can top up your record by paying in voluntary National Insurance contributions.
To get the old, full basic state pension, you will need 30 years of contributions or credits.
You will need at least 10 years on your NI record to get any state pension.