If you do not claim your State Pension when you reach State Pension age, it is deferred automatically. Under the new State Pension, each 9 weeks of deferral adds 1% to your weekly pension for life, just under 5.8% a year, or you can take up to 52 weeks of missed pension as a one off arrears payment. The extra is taxable income, and GOV.UK says it takes over 15 years to recover one year of deferred full new State Pension.
How does deferral work?
GOV.UK explains that you do not need to do anything to defer: if you do not claim at State Pension age, the pension simply builds up. What you get depends on when you reached State Pension age. Men born on or after 6 April 1951 and women born on or after 6 April 1953 reached it on or after 6 April 2016 and are under the new State Pension. Anyone older is under the old basic State Pension rules.
The new State Pension rules are in sections 16 and 17 of the Pensions Act 2014. Section 17 increases the weekly rate by an increment for each whole week of deferral, but not if the total increase would be less than 1%. Section 16 also lets someone who has already started claiming suspend their pension to earn increments, but only on one occasion. Your National Insurance record determines the starting amount being deferred, as explained in checking your National Insurance record for State Pension.
How much extra do you get under the new State Pension?
You must defer for at least 9 weeks. For every 9 weeks you defer, 1% is added to your weekly pension for life, which works out at just under 5.8% for each 52 weeks. The full new State Pension is £241.30 a week for 2026 to 2027, and GOV.UK gives these examples:
| Deferral | Extra each week |
|---|---|
| 52 weeks | £13.99 (5.8% of £241.30) |
| 104 weeks | £27.99 (11.6% of £241.30) |
Instead of a higher pension you can take a one off arrears payment of up to 52 weeks, which for a full new State Pension deferred for 52 weeks is £12,547.60. No interest is added. If you defer for longer than 52 weeks, the excess becomes extra weekly pension, so someone who defers for 78 weeks can backdate 12 months as a lump of arrears and take extra pension for the other 26 weeks. After you claim, the extra is normally increased each year in line with the Consumer Price Index.
What if you reached State Pension age before 6 April 2016?
The old rules were more generous. The minimum deferral is 5 weeks, and each 5 weeks adds 1%, just under 10.4% for each 52 weeks. Alternatively, if you defer for at least 12 months, you can take a lump sum that includes interest at 2% above the Bank of England base rate. You cannot normally have both, unless you reached State Pension age and deferred before 2005. When you claim, you receive a letter and have 3 months from its date to choose.
How is the extra State Pension taxed?
Extra weekly pension from deferral is simply part of your State Pension. Section 577 of the Income Tax (Earnings and Pensions) Act 2003 brings the State Pension into charge as pension income, and section 578 taxes the amount accruing in a tax year, irrespective of when it is actually paid. A new State Pension arrears payment is backdated pension, so the part that relates to an earlier tax year belongs to that year’s income rather than the year you receive it. How the State Pension uses your Personal Allowance and how the tax is collected are covered in is the State Pension taxable.
The old rules lump sum is taxed differently. Section 7 Finance (No. 2) Act 2005 charges a State Pension lump sum to income tax but does not add it to your total income. Instead it is taxed at a single rate set by your other income after allowances in the year: 0% if that income is nil, otherwise the basic, higher or additional rate according to the band your other income reaches. Scottish and Welsh taxpayers use their own rates, as explained in our Scottish income tax guide. Where social security regulations let you elect to have the lump sum paid in the following tax year, section 8 taxes it in that later year instead, which can help if your income will fall.
How do benefits affect deferral?
GOV.UK lists benefits during which you cannot build up extra State Pension. They include Pension Credit, income related Employment and Support Allowance, Universal Credit, Carer’s Allowance, Carer Support Payment, Incapacity Benefit, Severe Disablement Allowance, Widow’s Pension, Widowed Parent’s Allowance and Unemployability Supplement. You also cannot build up extra while your partner gets Pension Credit, Universal Credit or income related Employment and Support Allowance, and those weeks do not count towards the minimum deferral period.
Taking the extra as higher weekly payments can reduce Pension Credit, Universal Credit, income related Employment and Support Allowance, Housing Benefit and Council Tax Reduction. If you have deferred, you need to claim the Winter Fuel Payment yourself, once. If you move to a country outside the European Economic Area, Switzerland and the countries with a UK social security agreement (other than Canada and New Zealand), your extra payment stays fixed and will not go up over time. GOV.UK only describes inheriting a partner’s extra State Pension where the partner reached State Pension age before 6 April 2016.
When does deferring make sense?
Deferral is a trade: you give up pension now for a larger pension later, and the payback period is long. It is most likely to work where:
- you are still working and paying higher rate tax, so the pension you forgo would be taxed at a higher rate than the extra you receive later;
- you have good health and family longevity, given the payback period of more than 15 years for one year’s deferral;
- neither you nor your partner is on, or likely to claim, Pension Credit or Universal Credit;
- you want flexibility, since the arrears option lets you change your mind within 52 weeks without losing anything except interest.
Working past State Pension age has its own National Insurance consequences, covered in National Insurance over State Pension age.
A worked illustration
Illustration only, ignoring annual uprating. Alan is entitled to the full new State Pension, is still employed and pays 40% tax on all of it while working. He defers for 52 weeks, then retires and becomes a basic rate taxpayer.
| Item | Gross | After tax |
|---|---|---|
| Pension given up for 52 weeks | £12,547.60 | £7,528.56 at 40% |
| Extra pension each year (£13.99 x 52) | £727.48 | £581.98 at 20% |
| Years to recover, after tax | about 13 |
If he paid basic rate throughout, both figures fall by the same percentage and the payback is about 17 years. The tax rate difference shortens the payback, but it is still a long term decision.
What mistakes do people make?
- Expecting interest on a new State Pension arrears payment; only the old lump sum earns interest.
- Assuming the full arrears are taxed in the year received, when backdated pension belongs to the years it accrued.
- Overlooking a partner’s means tested benefits, which stop increments building up.
- Forgetting to claim the Winter Fuel Payment after deferring.
- Suspending a pension already in payment more than once, which section 16 does not allow.
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Sources
- GOV.UK: Deferring state pension
- GOV.UK: Print
- GOV.UK: New state pension
- legislation.gov.uk: Act 2014 c. 19, section 17
- legislation.gov.uk: Act 2014 c. 19, section 16
- legislation.gov.uk: Act 2003 c. 1, section 577
- legislation.gov.uk: Act 2003 c. 1, section 578
- legislation.gov.uk: Act 2005 c. 22, section 7
- legislation.gov.uk: Act 2005 c. 22, section 8
Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.