£45,000 pension bonus to retire late

WORKERS who delay retirement for five years will receive a windfall of up to £ 45,000 in their State pensions, the Government has announced.

Their pensions will enjoy interest rates of at least 2% above the Bank of England base rate.

This means that men who work until the age of 70 will receive lump sums of £30,000 on average, while some will get around £45,000.

Women who work five years beyond the retirement age of 60 will get an average £18,000 and as much as £23,000.

The Government says the move will give 'more choice' on when to retire. But critics will see the plan as an attempt to salvage something from the pensions crisis. Many retirees may not have enough for their old age because of mis-selling of private pensions and the closure of final-salary schemes.

Men and women can begin deferring their State pensions from April next year.

Work and Pensions Secretary Andrew Smith announced the rate on Tuesday. Interest of 2% above today's base rate would work out at 6%. The proposal is contained in the Pensions Bill, which was published earlier this month.

Smith said: 'We will be giving people more choice about when they retire by giving a much better deal to those who choose to take their State pension late.'

Tory spokesman David Willetts welcomed the move but said Ministers had not worked out how it would affect means-tested benefits.