Important information

We are currently experiencing technical difficulties with our Isle of Man phone line. We hope to have this rectified as soon as possible. In the meantime please email us on Thank you for your patience.

One in 10 workers have paused pension contributions since UK lockdown began

  • A further 13% of workers considering pausing contributions
  • Thirty year old earning £30,000 and making minimum pension contributions (8%) risks facing retirement with £45,000 less after a three year pension holiday
  • Fifty year old earning £100,000 and contributing 10% to their pension could see their retirement pot be over £70,000 lower after a three year contribution holiday

Research conducted by Canada Life1 shows that one in ten workers have paused pension contributions. This could have serious implications for retirement hopes across the country.  Of those who paused contributions the biggest reason (37%) was to use the money for essential spending. Thirty per cent had paused because of redundancy or furlough.


Pausing contributions to a DC pension for three years could wipe thousands off a pension pot unless contributions are increased significantly upon re-joining.  Analysis2 by Canada Life has looked at the implications three-year pension holidays would have for individuals at age thirty, forty and fifty at different earning and contribution levels. Opting out of an automatic enrolment scheme will see people re-enrolled 3 years later, unless they make an active choice to re-join in the meantime.


The analysis reveals that a thirty year old earning £30,000 could lose over £45,000 from the value of their pension by opting out of a pension for just three years. This would result in a drop in value of the pension at age 67 of over 9%, or £45,000 less at retirement. To have the best chance of making up the shortfall they would need to increase the total pension payments by just below 9%, an additional contribution of nearly £13,000, which could be made through additional employer contributions, employee contributions or a combination of both.


The results become starker as an individual gets closer to retirement. For example a fifty year old earning £100,000 a year with an existing pension valued at £100,000 could see their pension pot fall by over £70,000, or just over 11% after a three year pension contribution holiday.


Andrew Tully, technical director at Canada Life comments on what individuals should be aware of prior to pausing contributions:

“With Covid-19 hitting personal finances harder than ever it is not too surprising that many have started to view their pension contributions as discretionary. While a three-year pension holiday may seem like a minor break in the context of a career spanning decades, our analysis shows that the long-term impact of that decision could be significant. Any choices made now could have real significance to the quality of life in retirement so it is vital that the impact of this is understood properly, from the outset.


“It is worrying to see that 13% of respondents were actively considering a pension holiday. However, there are some ways to mitigate the potential impact. Our analysis shows that losses can be recovered at each stage of a working life as long as there is a plan in place to resume contributions as soon as practicable.  Savers will also need to understand that contributions will need to be higher than they were before and in some cases by as much as a fifth for those closer to retirement.”


Cost of a pension holiday


Fund value at age 67 with no contribution ‘holiday’

Fund value at age 67 after a three year contribution ‘holiday’

Amount ‘lost’

Pot size percentage decrease

New contribution rate required to make up shortfall

Additional contributions required to make up shortfall

Thirty year old earning £30,000 a year and  contributing a total of 8% to a pension (assumes no initial pension savings)





8.8% (rather than 8%)


Forty year old earning £50,000 a year and contributing a total of 8% to a pension, existing pension value £50,000





9.1% (rather than 8%)


Fifty year old earning £100,000 a year  and contributing a total of 10% to a pension, existing pension value £100,000





12.2% (rather than 8%)



  1. Source: Opinium survey of over 2,000 UK adults, 21-25 August 2020.
  2. Source: Financial modelling by Canada Life on the impact of stopping pension contributions for a three year period.