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How does working part time affect your pension?
Many of us are looking to work part-time to balance the many demands on our time – while giving us more income . You might be looking to work part time after retirement. This article looks at part time working and pensions, and will help to answer some common questions…
How does working part time affect pension rights?
In any job, it’s illegal for an employer to treat an employee working part time differently from someone doing the same job, full-time. You have the same rights to join your employer’s workplace pension scheme or to be automatically enrolled. So part time workers’ pension rights are the same as those of full time workers.
Do remember that as a part-time worker your earnings are likely to be lower than someone who works full-time, and so your pension benefits will also be lower.
You can find out more about your rights as a part-time worker on the Government’s website.
Claiming state pension and working part time
Many of us are worried that the state pension won’t provide enough income, and so are considering finding a part time job. There’s nothing to stop you continuing to work – either full time or part time – after state pension age. So the answer to the question “will my pension be affected if I ?” is a clear no.
You can claim your state pension while working. You can also delay accessing your state pension, which will give you larger weekly payments once you do start claiming it.
An advantage of working past state pension age is that you no longer need to pay National Insurance. You may pay tax, though, depending on your total income (there’s no tax on your state pension).
Pension credit and working part time
Pension credit is an income-related benefit aimed at people over state pension age who are on low incomes. You may be eligible for a weekly top-up to your income via pension credits.
Before you decide to work part-time to supplement your retirement income, do check whether you might be eligible for pension credit. The government believes that 60% of those eligible aren’t currently claiming this benefit.
Can I take my private pension and still work?
Yes. Much as with the state pension, you are able to continue to work as long as you like post state pension age. It’s illegal for employers to force any worker to retire unless the role requires certain physical abilities or there’s a legal age limit.
Your pension is your own and there aren’t usually any age limits on when you have to start drawing on it. Speak to a financial advisor to work out the best approach, as there are often lots of different options in financial planning for your retirement.
How many hours can I work after retirement?
There’s no legal limit on the number of hours you work, just as there’s no longer a formal ‘retirement’ age. You can continue to work full or part time for as long as you wish.
Just make sure that your health isn’t affected by the level of your work and that you have a balance of work and leisure time that suits you.
Working past retirement age – your rights
All workers, no matter what their age, have the same employment rights. It’s unlawful to discriminate against anyone at work because of their age.
An important right to be aware of is your right to flexible working – if you would like to work remotely or change your hours you are legally entitled to request it. There’s lots of advice about flexible working requests – and other workers’ rights – on our pages.
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Comments [16]
Babs ann Oneill says:
if i work 16 hours will i have to pay tax and insurance as i am a pensioner of 74\
Mandy Garner says:
Income you receive from part-time work in retirement counts as ‘taxable income’– 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. For people who reached 65 before 6 April 2014, there is a higher tax-free personal allowance. You may also qualify for other allowances that can reduce your tax bill.
Dave says:
Hi, I am currently 64, took early retirement and have a small private pension circa 8k a year. If I now do some part time work of around 4/ 5k a year, this will be classed as casual work with a contract as such, will I liable to tax and is it likely tax will be deducted regardless of the yearly earnings being below my personal allowance. Where will the tax be deducted from?. Thanks
Mandy Garner says:
I am getting our tax expert to reply and will send the answer to you directly.
kathryn mallalieu says:
Hello, Could you kindly tell me if I may work part time whilst in receipt of State Pension Credit? I am finding it more and more difficult to manage even with this allowance in addition to my State Pension so would be grateful if you have any information on this.
Mandy Garner says:
Hi, You should contact turn2us.org.uk who are experts in benefits and would be able to advise.
Gosh says:
Hello, would working past retirement age count towards the min 35 years of contributions or would they need to be voluntarily paid / topped up before reaching the retirement age?
Mandy Garner says:
Yes. They are then called Class 3 contributions but still qualify. The best thing is to ring up the DWP/Pensions Office in Newcastle.
Mr Mark Willoughby says:
hi i am taking my company pension which is below my personnel tax threshold so i pay no tax or nat insurance ..the job i am looking at is approx 7800 a year will i pay tax and nat insurance on this income…i have been told i would get taxed 20% on the whole 7800…thanks in advane mark
Mandy Garner says:
Hi, the following spells out what tax you would pay – https://www.which.co.uk/money/tax/income-tax/tax-rates-and-allowances/how-much-tax-you-pay-an5mb0l210t2
Cassandra Holman says:
Will I qualify for a full state pension if I’m working part-time?
Mandy Garner says:
Hi, Going part-time shouldn’t affect your entitlement to a state pension, depending on your earnings. It is based on the number of years you pay National Insurance contributions – https://www.citizensadvice.org.uk/debt-and-money/pensions/types-of-pension/state-pension/. The Citizens Advice site links to a pensions calculator so you can see what you will get.
Caroline Waite says:
I receive state retirement pension and as I have no savings would I be able to work say two days weekly. How much tax would I pay?
Mandy Garner says:
Yes, you can – see https://www.gov.uk/working-retirement-pension-age#. Tax would depend on earnings – see https://www.moneysavingexpert.com/tax-calculator/
Ray Francis says:
Can you please advise me on how much you can earn part time working before it effects the penstion
Mandy Garner says:
Hi, Can you provide a little more information. Are you talking about pension credit or normal state pension, on which there should be no impact [as it states in this article].