Reaching State pension age does not automatically initiate payments; pensioners must actively apply for their pension. Indeed, some people prefer to defer payment of their pension while continuing to work.
The Department for Work and Pensions (DWP) has released new statistics which show that nearly 12.7 million older people in the UK receive the State Pension, a benefit paid to people aged 66 and over who have paid National Insurance contributions for at least 10 years.
However, many approaching the retirement threshold may be unaware that they must claim their State Pension; otherwise, they could miss out on weekly payments of up to £221.20.
The Importance of Claiming Your State Pension
The State Pension is not automatically disbursed upon reaching the eligible age of 66. This system allows individuals the choice to defer their pension to increase their future payments, especially if they have not met the full 35 years of National Insurance Contributions or were ‘contracted out’ in the past.
The DWP clarifies: “You do not get your State Pension automatically – you have to claim it. You should receive a letter about two months before you reach State Pension age, outlining the steps to take.”
Options: Claim or Defer
According to DWP guidance, individuals can either claim their State Pension or choose to defer it. If you prefer to defer, no action is required; your pension will be automatically deferred until you decide to claim it, as reported by the Daily Record.
Deferring your State Pension can increase your payments by approximately 1% for every nine weeks of deferral, or nearly 5.8% for each full year deferred.
This additional amount is included in your regular State Pension payment. However, it is important to remember that these extra payments are subject to tax. You can find detailed information on the GOV.UK website.
Deferred State Pensions also benefit from annual increases aligned with the Consumer Price Index (CPI) inflation rate from September and the highest measure of the Triple Lock policy.
Payment Rates for 2024/25
- Full State Pension: £221.20 per week
- Four-week payment: £884.80
First Payment Details
Your first State Pension payment is typically made within five weeks of reaching the eligible age, followed by full payments every four weeks. Do not be surprised if a partial payment is made before the first full payment – this is simply a small financial teaser. Expect to receive a letter giving you all the details of what to expect.
You can choose to receive your State Pension payments weekly or fortnightly, which might reduce the wait time for your initial payment.
Payment Schedule
The day your State Pension is paid is determined by the last two digits of your National Insurance number:
- 00-19: Monday
- 20-39: Tuesday
- 40-59: Wednesday
- 60-79: Thursday
- 80-99: Friday
Calculating Your State Pension
For those with qualifying National Insurance years up to April 5, 2016, the DWP calculates a ‘starting amount’ for the new State Pension. This is the higher of the amount accrued under the old system up to April 2016 or the amount accrued under the new system if it had been in place throughout your working life.
This calculation considers any periods of being contracted out of the Additional State Pension. Your starting amount could be less than, equal to, or more than the full new State Pension.
If you are wondering how much your State pension will be, you can easily find out. Well, using the “Check your State Pension” online service is an easy way to find out.
It also allows you to view your National Insurance contribution history. More information on deferring your State Pension is available on the GOV.UK website
Got a reaction? Share your thoughts in the comments
Enjoyed this article? Subscribe to our free newsletter for engaging stories, exclusive content, and the latest news.
