£Thousands of Reasons Not to Stop Pension Contributions During Cost of Living Crisis

Published / Last Updated on 23/08/2022

Many pension providers are worried that inflation and the cost of living crisis with energy bills forecast to increase by up the treble over the coming year (and that’s on top of them already nearly doubling for many), will force people to make cut-backs to non-essential expenses such as pension contributions.

Scottish Widows, Canada Life, Legal and General and more pension providers are starting to ‘mobilise’ with warnings as to the long term impact of stopping payments and worst of all then losing the pension contribution from your employer too.

Pension providers are issuing guidance on how important it is to look after your long term future despite the current strains on our spending habits using videos, social media, press coverage and more.


We decided to take a simple look at suspending pension payments for a typical workplace pension of say £100pm employee payments (5% gross) and an employer contribution of say £60pm (3% gross) for just two years for someone aged 20, 30, 40 and 50 years old, retiring at age 67.


Fund Value at 67 if Continue Premiums

Fund Value at 67 if suspend for 2 yrs

2 yrs Net Employee Premium Saved

Fund Value at 67 Reduced By





















Assumptions:  Employer £60pm gross, £80pm net (employee) £100pm gross.  Total £160pm.  Basic rate rax relief of 20.00% added to employee pension contributions and applied at source.  FCA pensions mid rate growth of 5.00 % pa less annual management charge of 1.00 % pa, both applied/deducted monthly.  The value of funds, rates and investment returns can fall as well as rise and are not guaranteed so you could get back less than you invest.  Taxation, tax relief rates and law are subject to change.

Even at 50 years old, by stopping £80pm net (£100pm gross) pension contributions means this employee will save £1,920 but also loses employer contributions of £720 over two years resulting in a pension fund value reduction of £7,273 at age 67.  The younger you are, the more you stand to lose e.g., at age 30, by suspending these pension payments for just two years, the projected pension fund is reduced by £16,185.

Your pension premiums are not ‘non-essential’ expenses, they are one of the most important parts of your long term financial security in retirement and suspending payments even just for a couple of years is extremely costly, in particular for younger ages.  Pension contributions are in fact essential expense items.

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