25 September 2008 – Publication of DWP research report 526: State Pension Deferral: Public Awareness and Attitudes

Research published today provides information about awareness and attitudes towards deferral of State Pension.

• The research found that the majority of people choosing to defer their state pension were in paid work, and the reasons for deferring tended to relate to decisions about paid work and perceptions of immediate and future financial need. People tended to have made their decisions about remaining in paid work beyond State Pension Age before they decided to defer their State Pension.
• Although many knew that it was possible to delay their claim for State Pension, awareness of the deferral options was more limited. People tended to recall receiving information from DWP about their options, but the usefulness of this information was mixed, depending on people's engagement with financial matters more generally.
• The extra State Pension (formerly called increment) option – whereby people accrue additional pension - was favoured by those who saw it as providing greater financial security and a potentially greater long term profit, while the lump sum option attracted those who felt able to spend their deferred State Pension immediately and had specific plans for using the money.

Notes to Editors

1. This research is published on 25 September 2008 as part of the DWP Research Report Series as Research Report 526: State Pension Deferral: Public Awareness and Attitudes. It is available at http://research.dwp.gov.uk/asd/asd5
2. The authors are Nick Coleman, an independent social researcher, and Rosie McLeod, Oliver Norden and Alice Coulter of BMRB Social Research.
3. The research looked to:
   • Find out the characteristics of those people past State Pension age who do/do not defer their State Pension, as well as the characteristics of those who go on to claim extra State Pension (formerly called increments) or the lump sum;
   • Gauge awareness of deferral policies;
   • Understand what motivates people's deferral decisions.
4. The project consisted of a quantitative telephone survey and qualitative face-to-face interviews with the following groups:
   
   

   Group	Quantitative survey (2857 in total)	Qualitative follow-up (60 in total)
   People approaching SPA	506	-
   Current deliberate deferrers	319	15
   Current accidental deferrers	122	-
   Lump sum claimants (previous deferrers)	270	15
   Increment claimants (previous deferrers)	186	15
   Working claimants (non-deferrers)	362	15
   Non-working claimants (non-deferrers)	1092	-

5. Current deferral arrangements provide options for people who delay claiming their State Pension.
6. At present, individuals do not automatically receive their State Pension; they must submit a claim, and to help them PDCS sends them an "invitation to claim" pack around four months before they reach State Pension age. They also receive information about deferring their State Pension.
7. Since 2005 people wishing to defer have a choice of two rewards; they can choose either extra State Pension (which is paid with their State Pension) or they can choose a one-off taxable lump sum.
8. To get extra weekly State Pension someone must have deferred for at least five weeks. For each full year that they defer, they will get approximately ?1 extra each week for every ?10 of their State Pension.
9. To get the lump sum, someone must have deferred continuously for at least a year after April 2005. The lump sum payment includes the deferred State Pension, plus weekly interest. The rate of return is broadly equivalent to a yearly interest rate of 2% above the Bank of England base rate.

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