More than 13 million people across Great Britain are of State Pension age and receiving weekly payments of up to £241.30 a week. Those reaching the official age of retirement - which has now started a phased rise from 66 to 67 between now and 2028 - can stop working and claim their State Pension, defer claiming it or continue working and also claim it.
If you’re thinking about claiming it while still in employment, just remember the Personal Allowance is frozen at £12,570 until April 2031 and 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 be aware that, from State Pension age, they do not need to pay National Insurance Contributions (NICs) through their salary.
How to Stop Paying National Insurance
However, this income boost does not happen automatically and needs to be flagged up to your employer, although you can also get help doing it through HM Revenue and Customs (HMRC). If you’re an employee who has already reached State Pension age and still paying NICs, you can claim the money back.
Guidance on GOV.UK explains how the whole process of removing NICs from your pay works if you are an employee or self-employed. It states: “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 (start of the tax year) 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 (the amount of income you’re allowed before you pay tax).”
Proof of Age Required
The guidance states if you continue working, you need to show your employer proof of your age to make sure you stop paying National Insurance - this can be done with a birth certificate or passport. However, if you do not want your employer to see your birth certificate or passport, HMRC can send you a letter to show them instead.
The letter will confirm: You have reached State Pension age. You do not need to pay National Insurance. It’s important to be aware you will need to write to HMRC explaining why you do not want your employer to see your birth certificate or passport.
HMRC will 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. Full details on how to stop paying National Insurance from 66 and tax breaks available for people over State Pension age can be found on GOV.UK here.
Deferring Your State Pension
Deferring your State Pension could increase the payments you get each week when you decide to claim it, as long as you defer for at least nine weeks. Your State Pension increases by the equivalent of 1% for every nine weeks you defer, this works out as just under 5.8% for every 52 weeks.
The extra amount is paid with your regular State Pension payment, however, it’s important to be aware any extra payments you get from deferring could be taxed - find out more on GOV.UK here. It's also important to be aware deferred State Pensions increase each year in line with the September Consumer Price Index (CPI) inflation rate and not the highest measure of the Triple Lock measure.
