Approaching retirement

Updated on 15 June 2019

Pensioners

When you retire, your income and where it comes from will probably change. This means that the tax you pay and how you pay it might change too.

You might not stop work completely when you reach retirement, but the period around the state pension age is still a major change in your life. It is a time when things can go wrong with your tax affairs. You may also have to make some important decisions.

When do I reach state pension age?

The state pension age for women increased from 60 to 65, over the period 6 May 2010 to 6 November 2018. This affects women born between 6 April 1950 and 5 December 1953.

The state pension age for both men and women born after 5 December 1953 is gradually increasing from 65 to 68.

To work out your state pension age, you can use the state pension calculator on GOV.UK.

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What do I need to consider when I approach state pension age?

When you reach your state pension age, you are normally entitled to claim your state pension. You might also, for example:

  • stop work,

  • change to working part-time,

  • start to receive a regular pension from a previous employer, or

  • take money out of your pensions as lump sums or as a regular income.

When these changes happen, you should try to understand how they affect your tax and what you need to do.

You can continue to work after you reach your state pension age as a forced retirement age no longer exists. There are, however, some circumstances when you can be made to retire. There is more information on the GOV.UK website.

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What should I do as I approach state pension age?

There are a number of steps you can take as you approach your pension age to help you plan for your future. 

You might need to:

  • confirm the date of your entitlement to the state pension by using the state pension age calculator;
  • get a state pension statement which shows how much your state pension will be, if you decide to claim it when you are entitled;
  • claim your state pension online, when the time comes to take your pension. You can also telephone the Pension Service;
  • consider whether your changed circumstances might entitle you to
    • pension credit – there is more information on GOV.UK;
    • council tax reduction – there is more information on GOV.UK;
    • housing benefit – there is more information on GOV.UK;
    • marriage allowance – there is more information in the tax basics section;

    • winter fuel payment – there is more information on GOV.UK; or

    • an older person’s bus pass – there is more information on GOV.UK.

  • consider whether or not to defer your state pension;
  • check the tax position of any state pension lump sum (only applies if you reached state pension age before 6 April 2016 and deferred claiming your state pension);
  • consider whether or not you could cash in your pension, although be aware that for tax reasons it might not always be a good idea to take it all out in one go;
  • check whether you have the details of any workplace or private pension schemes that you have paid into. If you cannot find these, a tracing service is available. See GOV.UK for more information;

  • check your National Insurance position if you intend to continue working;
  • check your tax code and be aware of possible problems;
  • consider the position if you intend to retire abroad.

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Can I increase my state pension entitlement?

Your state pension is based on your National Insurance record when you reach your state pension age. The number of qualifying years you need depends upon when you reach pension age.

You can check your pension age on GOV.UK.   

The state pension changed for people who reach state pension age on or after 6 April 2016. This affects men born on or after 6 April 1951 and women born on or after 6 April 1953. The intention was to make the rules simpler and enable people to plan for their future by ensuring they know how much state pension they will receive.

The number of years you need to have paid, or been credited with, National Insurance contributions in order to qualify for a full state pension changed with the move from basic state pension to the new state pension as follows:

  • 30 years if you reached state pension age on or after 6 April 2010 but before 6 April 2016, or
  • 35 years if you reach state pension age on or after 6 April 2016.

You will usually need at least 10 qualifying years of National Insurance contributions or credits to qualify for any state pension. If you do not have 10 qualifying years in the UK but you have made social security contributions in another EEA member state or Switzerland over the course of your working life, your periods of overseas contributions can help you satisfy this condition. Please see our section on National Insurance and the UK state pension for migrants for more details.

You can check on GOV.UK how much state pension you could get, when you can get it and whether you can increase it.

It may be possible to pay voluntary National Insurance contributions if there are gaps in your record to increase your pension entitlement. You should note that there are time limits for doing so. Voluntary contributions may be either:

Before making any payment of voluntary contributions you should check with the Future Pension Centre that it is in your best interests to do so and that payment will increase your pension entitlement.

For help and advice on whether there are ways to increase your state pension you should contact the Future Pension Centre. Full contact details can be found on GOV.UK. You may also want to get independent financial advice.

From April 2019, the full new state pension is £168.60 per week, but if you were an employee who paid National Insurance contributions at the contracted-out rate this could affect the amount of state pension you will receive in the future. See our news article New State Pension – Did you pay contracted-out NIC? for more information.

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Where can I find more information?

Government information on tax and National Insurance for pensioners can be found on GOV.UK.

For practical information on the state pension, including the state pension age calculator and obtaining a forecast, go to GOV.UK.

For government information on pension choices, go to the Pension Wise website. We also help you understand tax on taking money out of your pension in our further guide.

For government information on planning your retirement income go to GOV.UK.

There is government information on planning for retirement on the Your Pension website.

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