“The reduction in the increase in State pension deferral from 10.4 percent pa to 5.8 percent from April 2016 is quite a big step change and it may cause many who are considering deferring their State pensions to reconsider whether that is the right thing for them to do” says Kay Ingram, divisional director of individual savings and investments at financial planners LEBC.

“That said, the deferral rate currently in place is quite generous and has not been overhauled for some time. If inflation and interest rates remain low, the 5.8 percent rate may still be attractive to some pensioners who are not yet drawing their pensions. If, as widely predicted, interest rates will start to increase later this year, the deferral rate will increasingly look like less good value and if this is accompanied by higher inflation, it could be less attractive for future pensioners to do this.

Whether an individual should defer or not, depends entirely on personal circumstances, including their health, the extent to which they have other income sources and the rate of income tax which they would pay if they received it now. This should be looked at by each person not as an isolated decision but as part of a comprehensive review of their retirement income options.”