Life can often be unpredictably challenging, so there are times when paying into your pension might not seem like a priority or even actually possible.
But it’s often good to keep chipping into it – paying into pension pots is pretty much always a good idea! What you’re really doing is making life that little bit easier and more comfortable for future you. And that’s the kind of investment we can all enjoy.
When you’re taking a break from work
Being between jobs can be financially challenging, whether it’s for a joyful reason like welcoming a new baby or a more stressful one like navigating illness or unemployment. But there's a silver lining: you can still give yourself a pension boost by paying into your pot.
True, keeping up with immediate expenses is crucial, but remember the long game. The longer you invest, the more time there is for your pension to grow – which could mean more for you in the long run. So if you can swing it, keep that pension pot simmering until a regular income starts coming in again. Like any investment though, the value will go up and down and you could end up with less than you put in.
| Pension contributions during maternity/paternity leave | ||
| Great news for new parents! When you’re taking a break to look after your child, pension payments can continue. And if you have a workplace pension your employer may also match your contributions, though the amount they pay in will shrink or stop if your pay goes down or stops. | ||
| Pension contributions through sickness absence | ||
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The journey through illness is challenging. But your future self will thank you for any pension contributions during sickness absence. And if you have a workplace pension your employer will keep on contributing, though again their contributions will shrink or stop if your income goes down or stops. People in poor health can sometimes also retire early. Take a look at our Early medical retirement due to ill health article to find out more. |
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| Unemployed pension contributions | ||
| Jobless spells are tough. You’ll probably need to budget carefully and count every penny to get through one. But if you can spare any money at all, think about making small contributions to your pension. Every little bit helps in the long run. |
When you already have a Workplace pension
You can pay into more than one pension at once. So if you’ve got a pension with your current job, but perhaps want to explore different investment funds or find a provider you’re more in sync with, you can set up and start paying into a personal pension too.
When you don’t qualify for auto-enrolment
Auto-enrolment does exactly what it says – it means your employer has to enrol you in a workplace pension when you start a permanent job with them. But it doesn’t always apply. You can have a job and still not qualify for workplace enrolment if you’re:
- Under 22
- Earning less than £10k
But if that’s the case, chances are you can still take the reins and opt into your company’s pension. Just talk to your employer to find out how.
When you’re self-employed
Going solo doesn't mean going without a pension. Whether you're freelancing or starting a business, you've still got options.
You could set up a personal pension. You won’t get employer contributions but the government will pay into it. Or you could join the National Employment Savings Trust (NEST) set up by the Government. And you can still make National Insurance payments, setting you up for the State Pension when you retire.
For more inspiration, check out the self-employment episode of our podcast Rewirement or take a look at our Self-employed pension page.
When you’ve got a lump sum to invest
If you’ve just got a bonus or inheritance, think about a one-off payment to your pension. It will get tax relief, and might save you money on your tax, National Insurance or student loan payments. For example, if a bonus goes straight into your pension you don’t pay any tax on it. But don’t forget that you’ve got a £60,000 tax relief limit each tax year.
What’s next?
Take a moment. Reflect. Do you recognise any of these five pension payment opportunities? And if so, are you ready to take advantage of them?
If you want to dig a little deeper, check out our related content below. And for a little more financial guidance, head over to MoneyHelper, which brings together the support and services of three government-backed financial guidance providers: the Money Advice Service, the Pensions Advisory Service and Pension Wise.
