Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • July 2014
07

Webb cuts deferred state pension increase to 5.8%

Open-access content Tuesday 22nd July 2014 — updated 5.13pm, Wednesday 29th April 2020

The state pension enhancement enjoyed by people who choose to defer taking the payment is to be cut by almost half, the government announced today.

Currently, the government encourages older people to postpone claiming their state pension by adding 10.4% on to the income for each year deferred. However, for anyone hitting the state pension age from April 2016, this rate will fall to 5.8%.

In a statement, pensions minister Steve Webb said the Government Actuary had been asked to report on what was the 'actuarially fair rate of increments for those reaching state pension age on or after April 6 2016 and those choosing to [postpone] their state pension beyond state pension age'.

Webb said: 'Following careful consideration of the information provided, the proposed new rate will be one ninth of 1% for each week the state pension is not claimed.

'This means a 1% increase for every nine weeks of deferral or around a 5.8% increase for each full year.'

Draft legislation for this change will be published later this year.

Commenting on the change, Tom McPhail, head of pensions research at investment firm Hargreaves Lansdown, said: 'The government is using the last day of term to shovel out the less popular outstanding announcements before heading off on holiday.

'The reduced rate of increase now means that someone choosing to defer for one year will now have to live for around 19 years to benefit from the decision; this compares to only around 10 years under the current rate of increase of 10.4%.

'With the population living longer and more people staying in the workforce later, it is hardly surprising that the government has chosen to cut back on this generous rate of return.'

This article appeared in our July 2014 issue of The Actuary.
Click here to view this issue
Filed in:
07
Topics:
Pensions

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Senior Underwriting Risk Manager

London (Central)
£85K-£95K + Benefits
Reference
124386

Reserving Manager (Contract)

London (Central)
£1200 - £1400 per day
Reference
124385

Life Actuary - Contract - IFRS 17 Financial Impact

England, London / England, Bristol / North Yorkshire, England
£900 - £1150 per day
Reference
124384
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2022 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ