More than 13 million people across Great Britain are of State Pension age and receiving weekly payments of up to £241.30. Those reaching the official retirement age—which is rising from 66 to 67 between now and 2028—can stop working, defer their State Pension, or continue working while claiming it.
Tax implications for working pensioners
If you claim your State Pension while still employed, remember the Personal Allowance is frozen at £12,570 until April 2031. Any income over that threshold will be taxed. While deferring can boost annual State Pension payments by nearly £700 each year, many older workers may not realise that from State Pension age, they no longer need to pay National Insurance Contributions (NICs) through their salary.
How to stop paying National Insurance
This income boost does not happen automatically and must be flagged to your employer. You can also get help through HM Revenue and Customs (HMRC). If you are an employee who has already reached State Pension age and is still paying NICs, you can claim the money back.
Guidance on GOV.UK explains: “If you’re self-employed, your Class 2 National Insurance contributions will no longer be treated as paid. You stop paying Class 4 National Insurance from 6 April after you reach State Pension age. You only pay Income Tax if your taxable income—including your private pension and State Pension—is more than your tax-free allowances.”
To stop paying National Insurance, you need to show your employer proof of your age, such as a birth certificate or passport. If you do not want your employer to see these documents, HMRC can send you a letter to show them instead. The letter will confirm you have reached State Pension age and do not need to pay National Insurance. You will need to write to HMRC explaining why you do not want your employer to see your documents. HMRC may ask you to send your birth certificate or passport for verification if it does not have a record of your date of birth; certified copies are accepted.
State Pension rates and deferring
The New State Pension is paid to men born on or after April 6, 1951, and women born on or after April 6, 1953. To receive the full amount, you need around 35 years of National Insurance Contributions, though you may need more if you were contracted out. The full weekly New State Pension rate is £241.30, or £965.20 every four weeks.
Deferring your State Pension could increase your weekly payments if you defer for at least nine weeks. Your State Pension increases by 1% for every nine weeks deferred, equivalent to just under 5.8% for every 52 weeks. The extra amount is paid with your regular State Pension, but any extra payments from deferring could be taxed. Deferred State Pensions increase each year in line with the September Consumer Price Index (CPI) inflation rate, not the Triple Lock measure.
