Profit by deferring your state pension

Delay getting your pension and you could receive a bigger payout. Merryn Somerset Webb explains.

There aren't many good deals available in the UK when it comes to pensions. That's why we have long rather liked the idea of deferring your state pension. Why? Because if you do, you can makerather a nice return.

There are two ways of deferring. You can defer for up to five years and then get your money paid out as a lump sum, plus compound interest of 2% over the base rate. This is a perfectly good return relative to those available elsewhere on cash, at the moment, and it is also an effective way to force yourself to save cash at a guaranteed rate of return.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.