Answers · UK 2025/26
What happens when you defer your State Pension and take a lump sum?
Under the old State Pension, you could defer and take a taxable lump sum at your marginal rate. Under the new State Pension (post-April 2016), only the enhanced weekly rate option applies -- no lump sum.
Full answer
For individuals who reached State Pension age on or after 6 April 2016 (new State Pension), deferral increases your weekly pension by 1% for every 9 weeks deferred (approximately 5.8% per year). There is no option to take a lump sum under the new State Pension -- only the higher weekly rate. For those on the old basic State Pension (reached SPA before April 2016), deferral can either add 1% per 5 weeks to the weekly amount, or the deferred entitlement can be taken as a lump sum at Bank of England base rate + 2% interest. The lump sum is taxed at your marginal rate in the year of receipt but not pushed into a higher band.
This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.