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Will working part-time affect my retirement benefits?

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When you reach retirement age, it doesn’t mean you have to give up work. In fact, there’s been a huge rise in the number of people that don’t. 
 
Over the past decade, the amount of those still working past the age of 70, either full- or part-time, has more than doubled. If you’re not into the relaxing retirement lifestyle, it can be a great way to fill your time and provide a steady income.
 
But what does working do to your retirement benefits? Not necessarily just those that are means-tested, but your State Pension, for example. Below is a guide to help you find out. 
 

Part-time work and pensions

If you’re still working past retirement age, you have an important decision to make. 
 
You can claim your State Pension and enjoy an income top-up alongside your weekly or monthly wage. However, if your salary and pension income is over your personal allowance – which in the 2019/20 tax year is £12,500 – you’ll have to pay Income Tax. What that rate of tax is depends on your income.  If that doesn’t sound appealing, another way is to defer your State pension. You may not think it, but most pensions – including private pensions – are flexible. 
 
By deferring your pension, you’re allowing it to grow further for when you eventually want it or pack in work, giving you a bit more cash later down the line. 
 

Part-time work and your pension benefits

If you choose to keep working past retirement age, some of your benefit entitlements may be affected. 
 
This includes Pension Credit, which is a weekly top-up should your income be lower than £155.60, or £237.55 for couples. 
 
Housing Benefit and Council Tax Benefit may also be affected, as they’re both based on your income, so it’s important you find out what the best option for you is. 
 
You can use the independent benefits calculator, Entitledto, to help. 
 

National Insurance

Whether you work full- or part-time after retirement age, you don’t have to pay National Insurance. 
 
Although not as significant as Income Tax, having that extra cash every week or month can make a big difference. 
 
Of course, you should always check whether this has been considered if you’re still working. The easiest way to do it is by giving your employer proof or age and check your payslips to make sure deductions are being made. 
 
You can also get a certificate of age exemption which authorises employers not to deduct National Insurance, from HMRC by calling 0845 302 1479.

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