Thinking of delaying taking your pension income?

We will write to you several months before your retirement date to give you the option to delay taking your pension income. You can tell us how you want us to keep your pension invested and if you want to pay into it. We will give you a new retirement date and you will continue to receive annual pension statements from us.

If you delay taking your pension income you may be able to save more into your pension fund and benefit from the tax savings of doing so. It will also give your pension the chance to grow, but there is no guarantee that it will and it may go down. Another thing to consider is your age. In general the older you are when you come to retire, the more income you'll get.

There are some risks involved in delaying your pension income. Some of these include:

• Changing annuity rates - annuity rates change regularly. So the rate you get when you do decide to retire might be lower than you would have got on your original retirement date - meaning a lower income for your retirement.
• Pension growth - taking your pension income later could give your pension a chance to grow. A bigger pension fund should normally mean a bigger income when you decide to take your pension income. However there is no guarantee that your pension fund will grow and it could go down in value. This could mean less income when you come to take your pension income.
• Lost income - You need to consider if the potential of a bigger future income is worth missing out on income now. For example if you could get an income of £1,000 a year now, but waited a year and got £1,100, it would take 10 years to make up for the income lost by delaying.
• Market Value Reduction charge - If you're invested in our With-Profits Fund and decide to take your pension income before your new delayed retirement date, we may need to apply a charge to your fund. This is known as a Market Value Reduction, which could reduce your income. A Market Value Reduction is a way to protect people who remain in our With-Profits Fund from the effects of other people leaving it.

When you reach your State Pension Age, you don't have to claim your State Pension straight away. Instead you can put it off, which is known as State Pension deferral. You don't need to do anything to defer your State Pension - it'll automatically be deferred as long as you don't make a claim.

The government introduced more generous rules in April 2005, making it more attractive to defer the State Pension. You have the choice of taking either a higher State Pension income or taking a lump sum, but you can't choose a combination of both.

So how do these options work:

• Extra State Pension Income - you can earn an increase to your State Pension of 1% for every 5 weeks you defer it - equivalent to around an extra 10.4% for each full year deferred. For example, if your State Pension was £100 a week and you decided to delay it for 5 years, your pension would increase to £152 a week. You can defer for as little as 5 weeks and you can put if off for as long as you like.
• Lump Sum - if you delay taking your State Pension for 12 consecutive months you can take a lump sum. This will be equal to the amount of pension you would have got, plus interest. The lump sum will be taxed at your usual rate of income tax. However it won't be added to the rest of your income, so it could be beneficial if taking the extra State Pension income would push you into a higher tax rate.

If you've already started to take your State Pension you can still take advantage of extra State Pension income or a lump sum by choosing to give up your State Pension for a period of time. If you defer your State Pension, you will still get the Winter Fuel Payment.

You can find more information on State Pension Deferral by visiting:

• Directgov- the official UK government website, giving information on State Pension deferral
• The Pensions Advisory Service (TPAS)- for independent information on State Pension deferral
• HM Revenue and Customs (HMRC)- for tax information on State Pension deferral