Good value in state pension top-up

For those reaching state retirement age before April 2016, the government is currently making a very generous offer.

If you defer your state pension, each year of deferment earns you a 10.4% increase in the pension you will get for life. The Telegraph cited an example of a 62-year old who would gain a total of £94,000 if they lived to age 95 by deferring their pension for just three years.

The rate of increase for deferment will fall after April 2016, but for those in good health – you will need to collect your pension for at least ten years to make up for the income you didn’t get – the current deal is far better than the investment return you can get anywhere else. As the Telegraph pointed out, if your health deteriorates you are also entitled to take the amount of income you deferred as a lump sum.