I started getting my state pension two years ago – can I stop it for now?

Readers can email in with any question about retirement and pension savings to be answered by our expert, Tom Selby, director of public policy at investment platform AJ Bell. There is nothing he does not know about pensions. Here, he explains that you can defer your state pension and get a larger weekly figure at a later date. (Photo: FabrikaCr/Getty/iStockphoto)

Better to stop withdrawing?

Question: “I am well over state pension age and am still working. I earn around £55,000 per year and started receiving my state pension nearly two years ago. As a 40 per cent taxpayer, is it better for me to stop withdrawing my state pension? And is this possible under the rules?” (Photo: insta_photos/Getty/iStockphoto)

Background on the state pension

Tom Selby answers: “Before getting onto the specifics of your question, a little background on the state pension. The UK state pension age is currently 66, although it is due to increase to 67 by 2028 and then again to 68 by 2046. [In 2025-26, the full ‘new’ state pension is worth £230.25 per week around £11,973 per year]. It is protected by the ‘triple-lock’, a political promise to increase the benefit by the highest of average earnings, inflation or 2.5 per cent. However, not everyone will get the full state pension amount. You need to have 35 qualifying years on your National Insurance (NI) record to be entitled to the full state pension, with lower amounts paid to those with shorter records. You need to have a 10-year National Insurance record to be entitled to any state pension under this system. Most people will build up an NI contribution record naturally through their working lives, while those who take time out of work for certain reasons, such as caring for a child or an elderly relative, can claim NI credits. Other factors, such as whether you ‘contracted-out’ under the old state pension system, will also affect your entitlement – although you can buy extra NI years to boost your state pension.” (Photo: Gareth Fuller/PA)

Can I stop receiving my state pension?

Tom continues: “It is possible to defer taking your UK state pension – and you’ll receive an uplift for doing so. The level of this uplift will depend on when you reached state pension age. You are also allowed to stop receiving your state pension after it has started and receive a similar uplift, although you can only do this once. For those who reached state pension age before 6 April 2016, the rate of uplift is 1 per cent for every five weeks you defer, subject to a minimum deferral period of five weeks. This works out at a 10.4 per cent increase in your state pension if you defer for 52 weeks. Based on the 2023/24 basic state pension of £156.20 per week, this would deliver an extra £16.24 per week for life if you deferred for 52 weeks. For anyone who reached state pension age on or after 6 April 2016, including you, the deferral rate is 1 per cent for every nine weeks they defer, or just under 5.8 per cent for every 52 weeks. You have to defer for at least nine weeks in order to benefit from this boost. Based on someone receiving the full state pension for 2023/24 of £203.85 a week, a person who deferred for 52 weeks would get an extra £11.82 per week for life.” (Photo: Andrzej Rostek/Getty/iStockphoto)

Should I defer taking the state pension?

“Whether or not state pension deferral is the right option will depend on your personal circumstances. For some it simply won’t be possible as they need the state pension income as soon as possible, while for others it might depend on their health and lifestyle. But if you are in good health then it could be worth considering. Take someone who reached the age of 66 in 2023/24 and is entitled to the full state pension of £203.85 a week. As mentioned above, if they defer taking this income for exactly one year, they will forgo £10,600 in return for an extra £11.82 a week for the rest of their life. Based on the state pension increasing by 2.5 per cent each year, it could take around 16 years to take as much total income via deferral as they could have done by taking the state pension at age 66. For someone with a state pension age of 66, this implies the point at which they might be in ‘profit’ from deferring the state pension could be around age 82. Given average life expectancy for a 66-year-old man is around 85 and a 66-year-old woman is around 87, this suggests that, provided you are in good health, there is a decent chance delaying receiving the state pension could pay off financially in these circumstances. State pension deferral could also be sensible from a tax perspective. If, for example, you are a higher-rate taxpayer at age 66 but choose to defer until age 68, when you expect to be a basic-rate taxpayer, then your income could be taxed at 20 per cent rather than 40 per cent. You should consider your complete financial circumstances, health and long-term goals, ideally with the help of a regulated adviser, before making any decision.” (Photo: Nuthawut Somsuk/Getty)