Pensioners who opt to delay claiming their State Pension by just one year are being warned it could take up to 17 years to recover the money they miss out on back. Deferring your State Pension is an option that’s available once you reach retirement age and doing so can give you increased pension payments in the future.

For those who reach State Pension age on or after April 6, 2016, State Pension payments will increase by the equivalent of 1% for every nine weeks you choose to defer, which works out as just under 5.8% for every 52 weeks. So if you get the full new State Pension, which is currently worth £230.25 per week, by deferring for 52 weeks you will get an extra £13.35 per week – or £694.20 in total over a year. Of course, not everyone is eligible to get the full new State Pension rate of £230.25 and if you get less than this then you might need more National Insurance qualifying years to boost your weekly payments.

But while deferral will mean your payments will increase in the future, pension experts say it’s important to consider the “cost of delay” before you make the decision, because while you might gain some extra cash down the line, you’ll also miss out on a significant chunk by deferring.

One key reason many pensioners choose to defer their state pension is to avoid paying tax on their pension income. If they are still earning, or drawing down from a private pension, they could lose money from their state pension to tax, so can avoid losing that by deferring for a year until they are no longer receiving that other income. So pensioners must weigh up all the factors to see which is more beneficial.

The 5.8% reward for deferring doesn’t go up the longer you choose to wait, so it means deferral because less good value as each year passes.

It also means that you will miss out on a year of income which, if you get the full new State Pension, is currently worth £11,973 annually – a cost which experts warn can take more than 17 years to get back.

Retirement Line explained with an example from the 2024/25 rates: “Whilst deferring your State Pension or putting it on hold will see your payments increase in the future, you need to consider the ‘cost of delay’. This is the money you miss out on by deferring.

“Say you are 66 and qualify for the full State Pension of £11,502 per year. If you delay commencing by a full year until you turn 67 then you can achieve a slightly higher State Pension income of £12,168 each year. That’s £666 a year more, based on your income increasing by 5.8% during those 12 months.

“However, you would miss that initial year’s income of £11,502. What many people do not consider is that it would take you just over 17 years to recoup that money, by which time you’ll be 84 years old. Bear in mind that a 66 year old man today has an average life expectancy of 85, with a 1-in-4 chance of living to 92 and 1-in-10 chance of living to 96. Life expectancy is even higher for women.

“Whichever gender you are, if you were to live past the age of 84 in this example then you effectively ‘beat the system’ by deferring for one year. As a result, you can achieve a higher overall State Pension income during your lifetime than you may have otherwise secured.

“However, if you don’t live long enough to benefit from the increased payments then you may miss out financially. Ultimately, the decision to defer involves predicting your life expectancy and financial needs.

“Of course, the above calculations assume no annual increase in the State Pension, so future rises in the State Pension could shorten the payback period. According to the consumer group Which?, a 2.5% annual increase would reduce the period to 15 years. Larger annual increases, like those experienced in recent years, would shorten it even further.”