I bet you didn't know that if you don't take retirement at the set age and defer your pension for a few years, you'll get free money to put towards it. Which'll mean you have more cash to spend on the things you enjoy when you do retire.

As life expectancy increases and more older people continue to remain active, healthy and work part-time past the set retirement age, deferring your pension can make a lot of sense.

So what's involved?

There are two ways you can get this pension top-up, and remember that in either case you don't have to continue working if you don't want, you just have to put off claiming your pension.

Extra state pension

This option is best if you want to defer for a shorter period. Put off claiming for at least five weeks you can earn an increase to your state pension of 1% for every five weeks you don't claim.

A lump sum payment

This option is probably better for those who wish to continue working (even if it's just part-time). If you defer claiming for 12 consecutive months you can receive a one-off lump sum payment in addition to your normal state pension. The 12 months must have fallen after 5 April 2005 and the payment will be based on the amount of normal weekly state pension you would have received, plus weekly interest added and compounded.

Even if you have already started receiving your state pension (before April 2005), you can cancel your claim and build up your entitlement to either of these options. Bear in mind you can only do this once.

What to do

If you haven't started claiming your pension yet, you don't need to do anything unless you are already claiming another social security benefit, in which case you'll need to tell the Pension Service.

If you already get your pension payments but want to stop claiming them, contact your pension centre.

You can find loads more information about deferring your state pension on the DirectGov website.