Can you take your pension while still working?

Can I take my pension and still work? The State Pension can be claimed while working; for other pensions, age and scheme rules decide, and tax follows.

The answer turns on which pension you mean. A defined contribution pot, the State Pension and a salary-linked scheme each follow different rules, and each is taken in turn below. Free, impartial, government-backed guidance on a defined contribution pot is available from Pension Wise, run through MoneyHelper. Setting your pay, pots and tax side by side is work for an FCA-authorised adviser. Leaving your name in the form on this page begins that, with no fee to you.

What sets the earliest date

The tax rule that sets the earliest date is pension rule 1 in the Finance Act 2004. It says no payment of pension may be made before the member reaches normal minimum pension age, unless the ill-health condition was met immediately before the member became entitled to a pension under the scheme (legislation.gov.uk, Finance Act 2004, section 165). That is a floor on age; whether a scheme will pay you while you stay in work is for its own rules, below. What the age is, and who keeps 55 after it rises, is covered in the guide to the minimum pension age and protected pension ages.

The second layer is your scheme. GOV.UK says the date depends on the scheme’s own rules and is usually 55 at the earliest (GOV.UK, Tax when you get a pension). A personal pension or SIPP is governed by the provider’s terms, and a workplace scheme from your current employer by its own rules, which may treat members still on the payroll differently.

What changes when you draw and work is the money side: how the income is taxed alongside pay, what you can then pay into a pension, and, for some schemes, whether your employer has to agree.

Pay and pension are taxed together

Pension money you draw and wages are added together for income tax. GOV.UK lists what makes up your total income for the year, including a private pension, earnings from employment or self-employment and the State Pension. Tax is due on pensions when total taxable income is more than the Personal Allowance, which is usually £12,570 (GOV.UK, Tax when you get a pension: what’s taxed).

The same page warns that you may have to pay Income Tax at a higher rate if you take a large amount from a private pension, and may owe extra tax at the end of the tax year.

The other trap is the tax code on the first flexible payment. HMRC’s PAYE manual says a P45 dated in the current tax year is operated on a month 1 basis; in every other case, a P45 from the previous tax year included, the scheme administrator uses the emergency tax code on a month 1 basis against the first payment, and HMRC then issues a code for later payments (HMRC, PAYE76170). Too much tax taken can be reclaimed; see pension tax refunds. You may also have a different tax code for each pension and job.

Drawing from one pot while earning, and perhaps holding another pot, makes the tax bill hard to predict. Anyone advising on this needs your real numbers. Entering yours on the form on this page asks an adviser the FCA has authorised to contact you.

Paying in afterwards: the money purchase annual allowance

If you plan to keep paying into a pension while drawing from a pot, this matters. GOV.UK says the usual annual allowance is £60,000 this tax year, counting everything paid into a defined contribution scheme by you or anyone else, an employer included, and that it can be lower if you flexibly access your pension (GOV.UK, Annual allowance). HMRC’s Pensions Tax Manual puts that money purchase annual allowance at £10,000 for 2023-24 onwards, applying from the tax year you first flexibly access and every year after, with no carry forward (HMRC, PTM056510).

The first drawdown income payment and the first uncrystallised funds pension lump sum are trigger events, and so is a lifetime annuity entitled to on or after 6 April 2015 whose terms allow decreases other than in prescribed circumstances (HMRC, PTM056520). Taking only a pension commencement lump sum does not trigger it, nor does a lifetime annuity that cannot decrease except in prescribed circumstances (HMRC, PTM056530). How each route triggers it is in drawdown compared with UFPLS; the MPAA guide goes further.

Tax relief on what you pay in is limited by earnings: it is available on private pension contributions worth up to 100% of your annual earnings (GOV.UK, Pension tax relief). How much a lower ceiling matters depends on what you expect to pay in later, a point to raise with Pension Wise or an adviser before the first payment.

The State Pension and a job

For the State Pension the position is stated plainly: GOV.UK says you can claim the new State Pension while you carry on working, or delay (defer) claiming it to increase the amount you get (GOV.UK, New State Pension: how to claim). It is taxable income added to your wages for the tax year, and if you are working or getting a private pension your tax code will usually change to collect the tax on it. See the State Pension guide for how it is paid and taxed, and taking it early for claiming before State Pension age.

Two things change once you reach State Pension age and keep working. National Insurance stops: employees stop paying Class 1 when they reach State Pension age, and the self-employed stop paying Class 4 from the following 6 April (GOV.UK, National Insurance). You can still pay into a workplace or personal pension, and auto-enrolment after State Pension age explains what an employer must and need not do.

If you do not claim at State Pension age, it automatically defers; for the new State Pension, each 9 weeks deferred adds 1% to the weekly payment for life. The extra could be taxed, and cannot build up while you or your partner get certain benefits (GOV.UK, Defer your State Pension). The trade-offs are in deferring the State Pension.

Final salary and public service schemes can add conditions

In a scheme that pays a pension from your salary and service rather than from a pot, the scheme’s own rules set whether you can draw while still employed, and several make it conditional. Two public service examples, read from the schemes’ own member pages on 20 October 2026, show how different the rules can be; other schemes have their own (final salary pensions are explained separately).

NHS Pension Scheme (2015 Scheme). NHS Pensions calls it partial retirement: if you are 55 or over and have your employer’s agreement, you can take part or all of your pension "while you continue working in NHS employment and build your pension benefits in the 2015 Scheme". It requires a new working arrangement that reduces pensionable pay by at least 10%, and pay must stay at the reduced level for at least 12 months or you will "no longer be eligible for the pension you’ve taken". In the first 12 months after partial retirement, abatement applies if pensionable pay rises to more than 90% of previous pensionable pay, and the pension in payment will then be stopped (NHS Pensions, Partial retirement). Separately, for someone who retires and returns to NHS work, abatement reduces the pension if earnings go over an earnings margin; from 1 April 2023 it was removed for members with Special Class or Mental Health Officer status or who claim age retirement benefits before age 60, and all other types of early retirement may affect the pension (NHS Pensions, Re-employment). See which NHS scheme you are in and cashing in an NHS pension.

Local Government Pension Scheme (England and Wales). The member pages say you can take the pension "at any time from age 55 to 75" and, with your employer’s agreement, "even take your pension without leaving your job", which they call flexible retirement. Ordinary voluntary retirement requires that you have left your job. Under flexible retirement you reduce your hours or move to a less senior position, and it is available "only if your employer agrees". Pension taken before normal pension age is normally reduced because it is paid earlier (LGPS member site, Taking your pension). Ask your employer for its policy.

Questions people ask about working and drawing a pension

Can I take my pension and keep working for the same company?

With a workplace defined contribution scheme, ask the trustees or provider whether benefits can be paid while you are employed. With a salary-linked public scheme, expect conditions: the NHS and LGPS examples above need your employer’s agreement and, in the NHS case, a cut in pensionable pay.

Is there a limit on how much I can earn while drawing a pension?

For the State Pension, GOV.UK’s guidance says you can claim even if you carry on working. For a defined contribution pot, what you earn is taxed alongside the pension, as above. NHS Pensions describes an earnings margin for some pensioners who return to NHS work.

Can I cash in my pension and still work?

Tax and the MPAA both come into it. Taking money out of a pension sets out the ways to do it, and the UFPLS guide covers the cash-lump-sum route.

Should I take my pension while I am still working?

That depends on things this page cannot see: how much you earn, what you plan to save, your health, other pots and your State Pension date. Taking a pension early or waiting weighs it up, and retiring early covers the case where work stops completely.

Pension Wise explains the options for a defined contribution pot at no charge. For a view that takes in your pay, pots and State Pension together, handing the form on this page your details will send the enquiry to an FCA-authorised adviser, and you pay nothing for that.