The Department for Work and Pensions (DWP) has issued a reminder to individuals approaching state pension age, emphasizing the importance of checking their options before submitting a claim. Labour Party minister and DWP minister Torsten Bell made this plea in response to a question from Labour MP Andrew Lewin in the House of Commons.
Claimant Responsibility for Deferring State Pension
Mr Bell stated: "The department does not know that a person has deferred until they submit a claim for their State Pension." He added: "Deferring entitlement to the State Pension is a personal choice based on an individual's circumstances. It is the claimant's responsibility to decide when to claim, including whether to defer it."
He explained that whether deferring is the right decision depends on various factors, such as the length of deferral, employment status, dependents, tax position before and after claiming, and entitlement to other benefits.
How Deferring Affects Payments
Mr Bell continued: "Deferring can affect the amount and timing of payment, and this is a decision only the claimant can make." He noted that individuals are directed to deferral information on the Government website when they are invited to claim their State Pension, with an invitation letter issued up to four months before reaching State Pension age.
If you do not claim your State Pension at State Pension age, it automatically defers. You do not have to take any action. When you eventually claim, you can usually receive the deferred pension as a one-off payment or as increased regular payments, known as 'extra State Pension'.
Tax Implications and Financial Advice
Any extra payments from deferring could be taxed. The amount you receive depends on when you reach State Pension age, according to the DWP website. Mr Bell urged: "The Department encourages people to seek independent financial advice before making a decision to defer their State Pension," as outlined on the government's planning for retirement income page.
