Do you pay National Insurance on your pension income?

From the start of your working life, you’ll likely have been paying National Insurance contributions, alongside income tax. 

By paying National Insurance you become eligible for certain benefits, most notably, the state pension. However, unlike income tax, which is based on your income over the year regardless of your age or work situation, you will, eventually stop paying National Insurance contributions.

Do I have to pay National Insurance on my pension?

No. National Insurance contributions stop being payable once you reach State Pension age and you do not need to pay National Insurance on your pension income. 

You might, however, still need to pay income tax on your pension income, if your total income for the year is over the personal allowance. This is currently £12,570 and will remain the same for the 2024/25 tax year.

Does it matter how much workplace or private pension I get?

It doesn’t matter how much income you receive, from the state, private or workplace pensions, you do not need to pay National Insurance on this money. The same applies for any annuity payments you might receive.

National Insurance is only payable on income from work earnings, whether you are employed or self-employed.

What if I retire early, do I have to pay National Insurance on my pension income then?

No. If you decide to retire before you reach the state pension age, you may still be able to start taking benefits from any workplace or private pension that you have. However, while you might have to pay income tax on this money, you won’t have to pay any National Insurance. This is because National Insurance is only paid on money you earn in work.

Do I have to pay National Insurance if I work beyond my state pension age?

More and more people are choosing to work into their retirement years, either because they want to do so, or they need to bolster their retirement income. Even though your employer will need to carry on paying National Insurance on your earnings, the good news is that you don’t. Once you reach state pension age, all responsibility to pay National Insurance stops.

To ensure National Insurance is no longer deducted from your earnings once you have reached state pension age, it makes sense to show some proof of your age to your employer. Alternatively, you can ask HMRC to write to your employer to inform them that you no longer need to pay National Insurance.

If you think you might have paid National Insurance since you reached state pension age, it’s important to contact HMRC for a refund.

What if I haven’t paid enough National Insurance to get the full state pension?

To be eligible for the full state pension, you’ll need to have paid 35 years of National Insurance contributions. This can either be from contributions you have paid from your earnings or with National Insurance credits that you may have received.

You may be entitled to National Insurance credits if you take time out of work to care for someone (your own children included), are unemployed or suffer from an illness or disability that makes you eligible for certain benefits.

If you have paid more than 10 years of National Insurance, but less than 35, you’ll get a proportional amount of the state pension. If you have less than 10 years National Insurance Contributions you will not get a state pension.

It may be possible to plug gaps in your National Insurance record with voluntary contributions, even if you have reached state pension age. You can usually buy voluntary contributions that cover the last six years.

To find out if you could benefit from buying voluntary National Insurance Contributions, it’s worth contacting the government’s Future Pension Centre.