Up to 57% of UK citizens would be willing to work a few more years past minimum retirement age before drawing their state pension if it resulted in a larger payout, according to research conducted by Skandia UK Group.

By deferring their state pensions for a number of years, pensioners can receive higher retirement benefits and with careful financial planning, ensure they pay less tax, pension product provider Skandia said. And providing the appropriate advice on whether deferral is the right course of action for pension holders is a new business opportunity for financial advisers.

According to Skandia, the tax planning opportunities for advisers occur when clients opt to take the lump sum payment. The enhanced weekly pension will be subject to income tax at the individual’s normal marginal tax rate. However, while the lump sum will be subject to income tax, it will only be taxed at the rate due ignoring the lump sum.

Skandia believes that where an individual who might usually be a higher rate tax payer can ensure that in the year they receive their state pension lump sum, their other taxable income is just below the higher rate threshold then they will be liable to income tax on the whole of the lump sum only at the basic rate. Such deferral could result in significant tax savings.

Colin Jelley, head of tax and financial planning at Skandia, said: The proposal in the Turner Report to raise the state pension age may not be the political ‘hot potato’ that some have suggested. Our research shows that many people would voluntarily consider delaying the state pension if it meant they would get more money. This creates tax planning opportunities for financial advisers particularly as their clients are likely to be the type of people who can realistically afford to defer their state pension.