Thousands of people in the UK decided to stop receiving their state pension during the 2018/19 financial year, a freedom of information (FOI) request by Canada Life found.
People can opt to suspend and then re-start their state pension, but it is only allowed if the payments have already started.
The rules are different for people who reached state pension age prior to 6 April 2016.
Those who qualified before that date can get a 10.4% enhanced sum for each year they suspended payments.
They can also opt to receive a lump sum made up of all the suspended payments plus interest of at least 2% above the Bank of England base rate, Canada Life said.
Switch off than back on
But for those who reached state pension age after 6 April 2016, the benefits are not as generous.
They will be given an enhancement of 5.8% for each suspended year, but they won’t be able to cash in a lump sum.
Additionally, around 1,500 people decided to re-start their state pension payments; earning, on average, an extra £44.50 ($58.14, €52.74) a week, according to Canada Life’s FOI.
The Department for Work and Pensions (DWP), however, said that caseload figures have been rounded to the nearest 100, and that the average increase was calculated on a 5% sample of cases it identified as re-starting state pension claims.
Take advantage of flexibility
Andrew Tully, technical director at Canada Life, said: “State pensions form the bedrock of most people’s financial plans in retirement.
“Financial planning experts often talk about the merits of deferring it if the income isn’t required at your state pension age, but the ability to be able to stop/start once you are in receipt of it is not a well-known area of the system.
“DWP data shows over 14,000 people elected to stop receiving their state pension in the 2018/19 tax year.”
He said the people who elected to stop receiving their state pension could have done so “for a number of reasons”.
“Most likely is the simple fact they didn’t need the income and were looking to manage their tax liability, either because they returned to work or continued in paid work, or possibly because they received an inheritance.
“This sort of flexibility is common in the private pension sector, where people are able to turn income on and off from pensions using the right products, but is not a well understood part of the state pension system.
“A regulated financial adviser will be best placed to not only help explain the myriad of choices available when you are considering accessing your pension savings for the first time, but will also keep you on the right track as you progress on your retirement journey,” Tully added.
