Over 440,000 people aged 70 or older in the UK are still working in some capacity, according to LV. That number isn’t a niche statistic — it reflects a growing reality where retirement no longer means a full stop on earning. Whether it’s topping up income, staying connected, or simply not being ready to stop, working past 65 is becoming more common. Here’s what you actually need to know.
Disclosure: Some links on this page are affiliate links. If you make a purchase through them, Britwealth may earn a commission at no extra cost to you. We only include products and services that are relevant to the topic.
This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
Working after retirement isn’t a single decision — it’s a set of trade-offs around tax, pension access, and National Insurance. The rules are straightforward in some places and surprisingly tricky in others. I’ve watched people assume they can just carry on as before, only to find their tax bill jumps or their pension contributions get capped. Understanding the mechanics early makes a real difference.
If you’re thinking about a phased retirement, the same principles apply — it’s about knowing where the thresholds sit before you cross them.
Understanding the Money Purchase Annual Allowance and Your Pension Options
The term you’ll hear most often is the Money Purchase Annual Allowance (MPAA). It’s the rule that limits how much you can pay into a defined contribution pension once you’ve already accessed it. For the 2023/24 tax year, that limit is £10,000 — down from the standard £60,000 annual allowance. Cross it, and you pay tax on the excess.
What I tend to notice is that people returning to work after accessing their pension don’t always realise this cap exists. If your new employer offers a pension and you’ve already taken a lump sum or started drawdown, you could trigger the MPAA without meaning to. The same applies if you’re self-employed and contributing to your own pot.
On the other side, you can still claim your workplace or private pension from age 55 (rising to 57 from April 2028). Defined benefit schemes pay a lifetime income; defined contribution schemes let you take a lump sum or drawdown. Up to 25% of your pot can be taken tax-free, with the rest taxed as income. That’s where the interaction with your earnings matters most — because every pound you earn sits on top of your pension income for tax purposes.
For a deeper look at how to structure your income, the guide on maximising your retirement income covers the trade-offs in more detail.
Why Working Past 65 Changes Your Tax and Pension Picture
The real-world consequence is straightforward: working after State Pension age means your total income — pension plus earnings — determines your tax bill. Around one in six over-55s have actively chosen to “unretire” and return to work, according to Legal & General. But the financial outcome depends heavily on how you access your pension and when you start drawing it.
Take someone who defers their State Pension. For every week you delay, your eventual weekly payment increases. No action is needed to defer — you simply don’t claim it. The trade-off is that you’re living on earnings or other savings in the meantime. For someone who needs the income now, deferring doesn’t make sense. For someone still earning comfortably, it can add up significantly over time.
There’s also a demographic split worth noting. Age UK data shows that 51.5% of older workers (66+) have a long-term illness. Women are 25% more likely to be forced to work than men, and Asian workers are 120% more likely to be forced to work than white workers. These aren’t abstract figures — they reflect real pressure on specific groups to keep earning when they might prefer not to.
If you’re in a situation where returning to work feels like the only option, it’s worth weighing the pros and cons of early retirement against the reality of your current costs. The decision isn’t just about income — it’s about what kind of work you can do and for how long.
Where People Get Tripped Up After Retirement
Assuming you can keep contributing at the full rate
The MPAA catches a lot of people. If you’ve accessed a defined contribution pension — even just taken the tax-free lump sum — your annual allowance drops to £10,000. That means if your new employer contributes £8,000 and you add £5,000, you’re over the limit. The excess is taxed at your marginal rate. The fix is to check whether you’ve triggered the MPAA before you start contributing again.
Not accounting for the tax band shift
Your State Pension counts as income. Add a part-time salary on top, and you can easily cross into the 40% band. The basic State Pension for 2023/24 is £156.20 per week — that’s £8,122 a year. A full new State Pension is £203.85 per week, or £10,600 a year. Earn £20,000 from a part-time role, and your total income sits around £30,600 — well within the basic rate band. But if you also draw from a private pension, the total can climb quickly. The scenario matters more than the rule.
Forgetting that employer contributions count toward the MPAA
If you return to work and your employer pays into a pension on your behalf, those contributions count toward the £10,000 MPAA limit. It’s not just your own money that matters. Some people opt out of their workplace pension to avoid the cap, but that means losing employer contributions. The trade-off is worth calculating before you decide.
Overlooking the flexible working option
Since April 2011, employers cannot force retirement based on age, except for roles with legal age limits like the fire service. You have the right to request flexible working, which can help you phase into retirement gradually. Many people don’t realise they can negotiate reduced hours or a different role rather than leaving entirely. ACAS provides guidance on how to approach this with your employer.
If you’re unsure about how the rules apply to your specific situation, a service like Financial Advisor can help clarify the tax and pension interaction without committing to a full financial plan.
How to Structure Work and Pension Income After 65
Decide whether to defer your State Pension
You don’t have to claim your State Pension the day you reach State Pension age. If you keep working, deferring increases your weekly payment when you eventually claim. The increase is calculated per week of deferral. No forms are needed — you simply don’t apply. The downside is that you’re forgoing income now for more later. For someone with adequate earnings, it can be a sensible move. For someone relying on that income, it isn’t.
Understand how pension access affects your contributions
If you’ve already taken money from a defined contribution pension, the MPAA applies. That means any new contributions — yours or your employer’s — are capped at £10,000 per tax year. If you haven’t accessed your pension yet, the standard £60,000 annual allowance still applies. The key is knowing which category you’re in before you start a new job or increase your contributions.
Check your tax code and total income
Your tax code adjusts based on your expected income. If you’re working and drawing a pension, HMRC may issue a code that collects the right tax across both sources. But it’s worth checking — if your code is wrong, you could owe tax at the end of the year. You can check your tax code via your personal tax account on GOV.UK. If you’re overpaying, you can claim a refund. If you’re underpaying, it’s better to know early.
Consider phased retirement as a middle ground
Rather than stopping work entirely, you can reduce hours, move to a less demanding role, or work freelance. Flexible working rights support this approach. Employers benefit from retaining experienced staff, and you keep earning while drawing less from your pension. The phased retirement guide covers the practical steps for negotiating this with your employer.
Frequently Asked Questions About Working After Retirement
Can I claim my State Pension and still work full-time? ▾
Do I pay National Insurance after State Pension age? ▾
What happens if I go over the MPAA limit? ▾
Can my employer force me to retire at 65? ▾
Can I return to work after medical retirement? ▾
Is there a limit on how much I can earn without losing my State Pension? ▾
Working Past 65 Is About Knowing the Thresholds, Not Just the Rules
The decision to work after retirement comes down to one thing: understanding how your earnings interact with your pension and tax position. The rules themselves are simple — no earnings cap, no National Insurance, and you can claim your State Pension whenever you want. But the thresholds around the MPAA, tax bands, and deferral decisions are where the real choices live. My advice is to run the numbers on your total income — pension plus earnings — before you commit to a new role or start drawing from your pot. That single calculation will tell you more than any rulebook.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read Retire Before 60: Unconventional Strategies for Early Freedom in the UK.
Sources and Further Reading
Is Phased Retirement Right for You? A UK Perspective — A practical look at reducing hours gradually rather than stopping work entirely.
Pension Pot Perfection: Maximising Your Retirement Income in the UK — How to structure your pension withdrawals alongside other income sources.
Legal & General (n.d.). Working After Retirement. 🔗
LV (n.d.). How Much Can You Earn After Retirement? 🔗
Age UK London (2024). Who Chooses to Work, and Who Is Forced to Work, After Retirement? 🔗
GOV.UK (n.d.). Help and Support for Older Workers. 🔗
