If you're contemplating working for longer, you might have some reservations about what happens to your state pension and your rights to keep your job.
Here, Which? bust six myths about working in retirement to help weigh up the pros and cons.
1. Employers can force you to retire
It’s true that employers used to be able to force workers to retire at 65 (known as the default retirement age), but this law was scrapped in 2011 following a campaign by Age UK.
However, there are still some cases where an employer can force you to retire at a certain age – known as a ‘compulsory retirement age’. But they must give a good reason why and follow a fair procedure to give you enough notice.
For example, if the job requires certain physical abilities such as the construction industry, or the job has an age limit set by law, such as the fire service.
Find out more: .2. You can’t receive your state pension and work
You can claim your state pension while you’re working as long as you’ve reached state pension age, which is currently 66, and rising to 67 between 2026 and 2028.
However, if you're still working, you may decide to defer your state pension, which will increase how much you get.
The new 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.
Find out more:3. You won’t have to pay tax
If you work after reaching state pension age, you’ll still have to pay income tax on any income above your personal allowance, which is £12,570 for the 2024-25 tax year.
This means if you're receiving a salary and your state pension, it’s very likely you’ll pay tax on some of this income.
However, once you hit state pension age you no longer have to pay National Insurance Contributions.
If you continue working, show your employer proof of your age (a birth certificate or passport, for example) to make sure you stop paying National Insurance.
Your employer will still have to pay Class 1 NICs if you continue working, but it shouldn't be deducted from your pay, although may appear on your wage slip.
If you're self-employed, you might also pay Class 4 NICs depending on your profits. As these are charged annually, you might still have to pay them on any taxable profits for the whole tax year in which you reach state pension age.
For example, if you reach state pension age on 6 September 2024. You’ll stop making Class 4 contributions from 6 April 2025 and pay your final Class 4 bill by 31 January 2026, together with your income tax.
Find out more: .4. You no longer need to do a tax return
If you’re self-employed, you'll still need to complete a self-assessment tax return once you hit state pension age.
You must declare your overall income, including the state pension and money from private pensions, for example your workplace pension.
Find out more: .5. You can’t keep saving into a pension
Many pensioners don’t realise that they can continue paying into their pension, even if they’ve given up work or accessed their retirement savings already.
If you’re a UK resident and under the age of 75, you can still save and earn tax relief on your pension contributions.
However, if you’ve already taken money from a money purchase, or defined contribution pension, your contributions (including tax relief) will be capped at £10,000 a year. This is known as the Money Purchase Annual Allowance (MPAA).
Continuing to pay contributions into your pension also could move you into a lower tax bracket as it helps reduce your overall income.
Find out more: .6. You won't be able to retrain
If you wanted to change your career, you could also consider attending university. There's currently no upper age limit for a tuition fee loan for an undergraduate course in England, Wales, Scotland and Northern Ireland, meaning students over the age of 60 can access them. However, those looking to get a master’s loan in England won't be eligible if they're aged 60 and over on the first day of the academic year of their course.
Find out more.Plan for retirement
If you do want to continue working, you should make sure you plan out your retirement and seek advice at the earliest opportunity.
You can get also free, impartial guidance from the Money and Pensions Service.
Find out more:source https://www.which.co.uk/news/article/6-myths-about-working-in-retirement-amArw7s6u5G0