State pension: How will wages impact payments and taxes if you work past retirement age? | Personal Finance | Finance


State pension payments will usually not come through automatically when a person reaches the appropriate age, it will need to be claimed. Additionally, for those who are able to, state pension payments can be received on top of income from employment.

There is nothing stopping people claiming state pension while still working, which will obviously boost income during a person’s later years.

It should be noted while state pensions can be affected by how a person works before claiming it, when they do start receiving a state pension the income from it won’t be affected by wages.

The money a person earns and the hours they work won’t affect state pension amounts but the claimant may have to pay tax on the state pension as well as their earnings.

This should be somewhat offset by the fact that people stop paying National Insurance when reaching state pension age.

READ MORE: Pension: Tax relief action ‘must be taken’ as HM Treasury makes plans

People should receive a letter from the government no later than two months before reaching their state pension age, guiding them on what to do.

However, even if a person has not received this letter they can still make a claim if they’re within four months of reaching their state pension age.

The government details the quickest way to claim a state pension is to apply online but it can also be claimed over the phone or by post.

There will be slightly different processes for those who are claiming an Isle of Man pension.

As these changes occur fairly frequently, it can be difficult to know exactly when it’s possible to retire.

Fortunately, the government provides free-to-use tools on their website which will allow people to check:

  • When they’ll reach their state pension age
  • When they’ll reach their pension credit qualifying age
  • When they’ll be eligible for free bus travel

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