The Fallacy of Deferring a UK State Pension

I increasingly see articles and newsletters exhorting people to defer their state pensions.

The articles claim for example "... with the new State pension now £172.50 a week, deferring for one year can increase the amount you receive by £10.16 a week or £528.32 a year".

However the articles fail to point out the critical problem created by deferring that pension. Although it is true that the pension will increase by £528.32 per year the recipient will permanently lose £8,970 by not taking the year's pension.

In order to recoup that loss of £8,970 the pensioner will have to live for another 17 years and what is worse will receive the annual annual increase devalued by inflation.

If you take inflation into account then the figures are as follows:

Inflation Rate            5%           4%                    3%                    2%                    1%
Period to Recoup
Your Year's
Loss of Pension          33.80          30.03          21.65          20.03          18.47