How to increase your state pension by £54,000
The findings indicate that a 62 year old who defers by three years would see the income available to them in retirement boosted by £54,000. This increase is made possible by a short-term policy provision that helps pensioners strengthen their pension entitlements.
However, those wishing to capitalise must hurry – the window of opportunity will soon close. Rates will decrease sharply after April 6th next year.
When the time comes for you to take your state pension, you will be offered the option of deferring. In the months leading up to this point, you’ll be sent a letter by the Department of Work & Pensions, detailing how deferrals function; you can alternatively view it from the DWP website.
The most obvious drawback to this strategy is that you’ll be deprived of pension income for three years. This means, of course, that you’ll have to find a way of supporting yourself in the intervening years.
Another potential downside is that this approach only becomes profitable if you live for 11 years after you start withdrawing your pension income. The longer you live, the more your pension funds will increase – deferral is thus not an option for those with lower life expectancies.
Finally, the Government is scheduled to reduce the rate of return. Anyone choosing to defer after April 6th next year will receive an increase of 5.8 per cent annually, rather than 10.4 per cent.