Retired

Staying in work

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Tax implications

If you have taken your benefits and plan to keep working - or go back to work - you may have important tax issues to think about.

Who is affected

You could face a large tax bill if you retire early, take your benefits after you reach 50 but before you reach 55, and then return to work. 

This applies if you were an active RPS member on 5 April 2006 and have a Protected Pension Age. (It's not applicable to ill-health cases). 

This could affect you if you return to work for the same employer; a company in the same corporate group; or another employer you are connected to in the RPS, within:

  • ​one month of retirement; or

  • ​six months of retirement, if you returned to do a job which is not ‘materially different’ in nature.

In these situations, you would lose your protected pension age for benefits in all sections of the RPS and HMRC would consider your benefits to be unauthorised payments, subject to a very high level of tax up to 70% until you reach 55. Depending on payment timings, this could affect your lump sum as well as your pension.

Who is not affected

The restriction doesn’t apply if you return to work for a company not related to you or your previous employer, or if you return to your previous employer after the above timescales. If you take your benefits after age 55, there is no restriction on returning to work for any employer.

Contact

If you plan to return to work within the stated timescales, you must tell Scheme administrator RPMI. This is because the Trustee doesn’t have the power to pay unauthorised payments without your permission, and the agreement of the Trustee and your former employer.

If you are under age 55, taking your benefits and thinking about returning to work, you must email RPMI at csu@rpmi.co.uk or tel: 0800 2 343434. When contacting RPMI, please quote your Pension Reference Number.

Financial advice

You should also seek independent financial advice about possible tax issues before you make a decision. Neither the Trustee, RPMI nor your employer can offer advice; nor should information provided by RPMI be relied on as advice about your individual circumstances.

Visit www.unbiased.co.uk for a list of independent financial advisers in your area.