Quick answer: Yes — from age 55 (57 from 2028) you can access a private pension while still working, and the State Pension is paid in full from State Pension age regardless of work. The catch: pension income stacks on your salary for tax, and taking taxable drawdown triggers the £10,000 Money Purchase Annual Allowance, cutting how much you can keep contributing.
Tax: pension stacks on salary
If you earn £45,000 and draw £20,000 from your pension, total taxable income is £65,000 — pushing ~£14,700 into the 40% band. Spreading withdrawals or taking only the 25% tax-free cash can be far more efficient.
The MPAA trap
Taking taxable income from a DC pension drops your annual allowance from £60,000 to £10,000. Things that DON'T trigger it: taking only the 25% tax-free cash, a lifetime annuity, or small-pots payments.
National Insurance
| Income | Pre-SP age | Post-SP age |
|---|---|---|
| Salary | NI applies | NI exempt |
| Pension income | NI exempt | NI exempt |
The phase-down approach
Many people use pension income to reduce work gradually — full-time → part-time supplemented by drawdown → State Pension arrives at 67. This avoids tax cliffs and keeps you contributing longer.
Read next: MPAA explained.
Frequently asked questions
Yes — there's no rule preventing you. From age 55 (57 from 2028), you can access defined contribution pensions while continuing to work. State Pension is also paid in full from State Pension age regardless of work status.
Yes — pension income stacks on top of salary. If you earn £45,000 and take £20,000 from your pension, the pension is taxed mostly at higher rate (40%). Spreading withdrawals or taking only the 25% tax-free cash can be more efficient.
The Money Purchase Annual Allowance reduces your pension contribution limit from £60,000 to £10,000 once you take taxable income from a DC pension. If you're still earning and want to keep contributing, this can be costly.
If you continue working, you pay employee NI on earnings up to State Pension age. After State Pension age, NI stops on earned income. Pension income is never subject to NI.
No — State Pension is calculated only on your NI qualifying years. Taking a private pension has no effect on your State Pension entitlement.
Yes, but watch the MPAA. If you only take the 25% tax-free cash without taxable income, contributions can continue at the full £60k allowance. Once you take any taxable drawdown income, the £10k MPAA kicks in.