Rules for working beyond pension age

Dan Moore / 16 February 2015 ( 20 March 2017 )

Not ready to give up working and retire at 65? We look at the things you will need to consider if you plan to carry on working after you have reached state pension age.



Not everyone wants to stop working when they hit state pension age.

Some of us still relish the thrill of the daily grind, while others prefer to keep working for financial reasons.

The good news is there’s no longer any requirement to call it a day at 65. In fact, most people can continue to work for as long as they want.

This right is enshrined in law under the Equality Act 2010, making it illegal to discriminate on the basis of age in the workplace. Effectively, this means your employer cannot force you to retire or set a compulsory retirement age, unless it can clearly justify it. Occupations that require heavy or repetitive lifting and a certain level of physical fitness, such as firefighters, may fall into this category.

The onus is on you to discuss with your employer when and how you would like to retire. This could include phased retirement, for example by switching from full- to part-time working.

Benefits of working beyond the state pension age

Being free to work on beyond state retirement age – perhaps to top up your income or to keep active – is attractive to many people. It comes with some additional perks, including the fact that you are no longer obliged to pay National Insurance.

This is also the case if you are self-employed, although you may still have some Class 4 contributions to make during the year you turn 65.

Are you one of the women disadvantaged by changes to the state pension age? Read more...

Working beyond retirement and the state pension

You may eligible to draw your state pension, but that doesn’t mean you have to if you’re still working. In fact, deferring your state pension could be a savvy move, particularly if it means you would otherwise be paying more in tax. 

Not only that but you’ll get more state pension by putting off your claim.

Alternatively, you can opt to take a higher weekly state pension for life. Whichever you choose, you may have to pay tax on it.

Income tax is not taken off your state pension, even if you have to pay tax. If you are working while claiming your state pension, income tax will be deducted from your wage, after taking into account your income, state pension and any other pension income you receive. 

Depending on your situation, you may have to fill in an annual tax return so that you can pay any income tax due.

A guide to completing a self-assessment tax return online

Deferring a private pension

You can also draw on a private pension and continue to work, if you are aged 55 or over. Of course, you may prefer to keep your pension fund invested for as long as possible, in order to potentially increase its value.

If you are intending to use the fund to buy an annuity, the older you are when you buy one, the better the rate (and level of income) you’ll receive. If you’re considering this, it’s best to seek financial advice.

Find out how the Saga Annuity Service, provided by Legal & General, may be able to help you get more retirement income from your pension.

What happens if I have an occupational pension?

If you are a member of an occupational pension scheme, you will need to discuss with your scheme manager what impact a change in working hours or income might have on your pension.

If applicable, you’ll also need to check whether the scheme supports phased retirement and working beyond the scheme’s normal pension age.

For example, many final salary schemes apply a pension age at which point you are expected to start claiming.

Read more about boosting your income by deferring your state pension

Your post-retirement work options

Many companies welcome older employees, appreciating your years of work experience. For this reason, far from thinking you’ll struggle to compete for positions with younger people you could be snapped up.

Working beyond the state retirement age doesn’t mean you have to continue to be an employee. You could become your own boss. Becoming self-employed need not be an administrative nightmare, as you probably won’t need to form a limited company or even be VAT registered unless you have a large or complex operation.

Instead, you could just operate as a sole trader. You’ll need to keep thorough records of your income, outgoings and expenses. Some, although not all, expenses will be tax-deductible, and while there is no definitive list of what you can claim for, HMRC runs guidance courses that can help. You could also employ an accountant to assist on these points, and to ensure your tax return is completed accurately.

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The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.