Two-thirds (66 per cent) of adults aged 40-65 said that they were not aware of the option to delay taking the state pension beyond the state pension age, analysis of data from the Department for Work and Pensions (DWP) has revealed.

Of the 34 per cent who did know they could delay, a third (33 per cent) were unsure what the impact of deferring would be on their regular payments, and an additional 8 per cent either thought they would receive the same amount or less.

The analysis from Just Group also found low levels of people deferring the state pension, with only one in 10 adults aged 66-75 saying that they had delayed their payments.

When asked why they deferred the state pension, the most popular options were either because people did not need the financial support to claim it as soon as they reached the State Pension age (49 per cent) or because they were attracted to the higher income later (48 per cent).

A fifth (20 per cent) also wanted to wait until they had stopped working before they claimed the state pension.

Currently, people who reached state pension age on or after 6 April 2016 receive the new state pension, and can benefit from a 1 per cent increase in their weekly state pension for every nine weeks that payments are deferred, equivalent to around 5.8 per cent extra income for every full year deferred.

With the triple lock boosting the new state pension to £230.25 a week this year, those who defer their payments for the 2025/26 financial year will benefit from an extra £13.35 a week - which equates to an additional £694.20 of income every year for life (plus any inflation-linked increases).

Those who reached state pension age before 6 April 2016 and chose to defer are treated more generously, with an extra 1 per cent income for every five weeks deferred, equal to an annual rise of 10.4 per cent or £954.20, which can be taken either as extra income or a lump sum.

However, the government has launched a review into the state pension age, looking at the factors it should consider relating to state pension age and the proportion of adult life currently spent in retirement.

"Defering your state pension is effectively a trade-off between receiving your full state pension payments today or an increased state pension later," explained Just Group communications director, Stephen Lowe.

“Delaying the state pension may not work for everybody but it’s certainly an option worth knowing about and exploring in more detail for those people who don’t need the money immediately,” he argued, adding that if you’re still working, deferring could help reduce your income tax bill in the short term and boost your pension income in later years when it may be needed more.

However, Lowe warned that the decision required “careful thought”, with health and life expectancy “key considerations” when weighing up whether you could benefit.

“Anyone unsure of their options can find further guidance from a range of sources,” he continued.

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