Do you pay National Insurance on pension income?

Full answer

National Insurance is a working-age contribution — once you reach State Pension age (SPA), currently **66** for both men and women, you no longer pay any National Insurance contributions, even if you continue to work. **What this means in practice:** - **State Pension:** No NI deducted — ever. - **Private/occupational pension (defined benefit or defined contribution):** No NI deducted. - **SIPP drawdown:** No NI deducted. - **Annuity income:** No NI deducted. - **If you work past 66:** You stop paying employee NI from the week/month you reach SPA. Your employer also stops paying employer NI on your earnings from SPA (though employer NI on other employees continues). **Income Tax still applies:** While NI stops, **Income Tax** continues on all income above the Personal Allowance (£12,570 in 2026/27). Pension income is treated as earned income for PAYE purposes. If you receive a State Pension plus a private pension, you may be taxed through your private pension via a PAYE code. **Emergency tax on first pension payment:** When you first draw from a defined contribution pension, your provider may apply an emergency tax code, resulting in a large initial tax deduction. You can reclaim the overpayment using: - **Form P55** — if taking a partial withdrawal - **Form P53Z** — if the entire fund was taken as a lump sum - **Form P50Z** — if retired and no further income expected that year **Defined Benefit pensions:** Monthly DB pension payments are made net of PAYE tax but gross of NI — confirming no NI applies.

Try the calculator

Related guides

• Uk Pension Types