Staying in work

Learn more about the rules and tax implications of staying in work after you take your IWDC pot.

Working after taking your IWDC pot

You may decide to keep working when you take your pension pot. Or you might want to go back to work once you retire.

Read on to understand the rules and tax implications for both options. 

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Staying in work and taking your pension pot

If you're not ready to retire then you may still be able to keep working and take your pension pot at any time from age 55 (or 57 from 6 April 2028), up to age 75.

You will not be able to take your pension pot before age 55, and continue working, even if you have a Protected Pension Age (PPA).  This is in line with pension law.  See the note on PPA below.

Taking your pension pot while you're still working may have an impact on the amount of tax you pay, particularly if your total income is over the Personal Allowance. You can find out more about tax rates on the government website.

When you take your pension pot you will no longer be contributing to the IWDC Section. If you’re still working your employer may let you re-join the Scheme or give you the opportunity to join a different workplace pension. Please contact your employer to find out if this could be an option.

Retiring and returning to work

If you retire and take your pension pot, you can still decide to work again at a later date. 

In most cases, as long as you take your pension pot after age 55, then there will be no restrictions on you working for any employer in the future.

When you take your pension pot, you will no longer be contributing to the IWDC Section and will not be considered an active member of the Scheme. If you do go back to work, your employer may let you re-join the Scheme or give you the opportunity to join a different workplace pension. This would need to be discussed with your employer directly.

Working after you have taken your pension pot may also have an impact on the amount of tax you pay, particularly if your total income is over the Personal Allowance. You can find out more about tax rates on the government website.

The impact of a Protected Pension Age (PPA) 

If you were an active member of the Scheme on 5 April 2006, you may have a Protected Pension Age (PPA). This gives you the right to take your pension pot from age 50.

If you have a PPA and rely on this to take your pension pot between the ages of 50 and 54, there are certain requirements you must follow. You must;

  • Leave work: and
  • Take all your Scheme benefits (including DB and IWDC) at the same time.

In addition, you must leave a gap of at least 1 month if you return to either the same employer or another employer in the same corporate group. You must leave a gap of at least 6 months if your new role is not materially different in nature to your previous role. 

If these restrictions are ignored, for example if you remain in employment with your current employer, you will lose your Protected Pension Age for benefits in all sections of the RPS. HM Revenue and Customs would also consider your benefits to be unauthorised payments, subject to a very high level of tax up to 55% until you reach 55. In addition, the Trustee is not allowed to make payments that are known to be unauthorised.

However, your Protected Pension Age would not be lost if you:

  • return to work for a company not related to you or your previous employer
  • return to your previous employer or a related employer after the above timescales
  • take your pension pot after age 55 and then return to work for any employer
PPA guide

For more information about the Protected Pension Age (PPA) and the rules that apply, please download the Protected Pension Age Read as You Need guide. 

If you were a member of the Railways Pension Scheme after 5 April 2006 but before 4 November 2021 and were born before 6 April 1973, you may have a Protected Pension Age (PPA) of 55. That means the earliest you can claim your pension is 55.

If you joined as a new entrant on and after 4 November 2021 and were born after 5 April 1973, you won’t have a PPA and the earliest you can claim your pension is 57.

If you need help deciding when to take your pension pot...

You might want to consider taking independent financial advice about your pension options and possible tax issues before you make any decisions. Visit the guidance and advice page for more information.  

You can find a summary of all your retirement options in the Read as You Need guide.

What to read next...

When to retire

Find out when you can take your IWDC pot.

Making the right decision

Things to consider before you decide when and how to take your IWDC pot.

Guidance and advice

Where to go for further support on your options.