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Wednesday, 3 October 2012

Working part-time after you retire

Reaching State Pension age doesn't mean you have to give up work - paid or voluntary. You can choose to keep on working while taking your State Pension entitlement, or delay your claim and get paid more later on. The government also offers schemes and incentives to help you find work.

Tax on part-time work and other income

Income you receive from part-time work in retirement counts as 'taxable income'. This is along with income from your State Pension, personal or company (occupational) pensions and from certain taxable benefits.

If your overall taxable income is more than your tax-free allowances you'll be taxed at the usual Income Tax rates on the difference. However you might earn more before paying tax. You don't pay any National Insurance when you're over State Pension age and currently, for people reaching age 65 before 6 April 2013, there is a higher tax-free personal allowance. You may also qualify for other allowances that can reduce your tax bill.

Working and putting off claiming your State Pension

There are incentives for you to take your State Pension later, instead of when you reach State Pension age ('deferring' your claim). If you put off claiming you have two possible options:

  • get a higher weekly State Pension for life later on
  • take the amount you deferred as a taxable lump sum with interest and then get a normal State Pension

You have to put off claiming your State Pension for at least five weeks to earn extra State Pension. You have to put off claiming your State Pension for at least 12 consecutive months to qualify for a lump sum payment.

Putting off your claim may be especially suitable if you want to work after you reach State Pension age. It will help make you less dependent on the State Pension. But even if you're not working you can still choose to get more by putting off your claim.

If you're thinking about deferring your State Pension, you need to consider how the changes to State Pensions from April 2010 may affect your decision. Read the following page for more information.

National minimum wage after you retire

You are still entitled to the national minimum wage for any paid work you do after you reach State Pension age. For advice you can phone the Pay and Work Rights helpline.

Effect of paid work on your current benefits

Any money you earn after State Pension age may affect income-related benefits such as Pension Credit, Housing Benefit and Council Tax Benefit.

Staff at your pension centre can tell you how income from paid work will affect your Pension Credit and other benefits. They can also advise you on how putting off claiming your State Pension might affect your benefit entitlement.

If you're looking for work through your local Jobcentre Plus, they should be able to tell you how working may affect your benefits.

Schemes to help older people find work

If you want to find work, there's a range of government services that can help.

Finding work as a volunteer

Working as a volunteer can be extremely rewarding after you retire. It can also help you learn new skills that you may be able to use later for paid work.

If you'd like to find out more about volunteering, there's a range of groups and services to help you. These cover everything from helping in schools to environmental work.

Carrying on work - more incentives since 2006

You don't need to stop working to claim your company pension, if you reached the age when you can start claiming after 1 April 2006. You have a number of options, including taking some of the pension you've built up while continuing to work for the same employer.

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