You might not be able to afford to continue paying contributions at the same rate – whether you’re employed or self-employed – if you have a:
- personal pension
- self-invested personal pension, or
- stakeholder pension scheme.
If you reduce your contributions, your pension pot will grow at a slower rate.
So you’ll have less money to use as an income when you decide to start taking it out.
It’s possible to protect some or all your contributions using waiver of premium, if your provider offers this.
Waiver of premium means your contributions will continue to be paid for you if you are unable to make them for a time. Often this will be if you suffer a serious injury, illness, or disability. There is likely to be additional cost to include this option and you would usually need to select it when the pension is first set up.
You could also use an income protection policy.
Many employers include this as part of their employment benefits package, but you can also set one up yourself.
An income protection policy can pay you an income if you’re unable to work due to ill health. This allows you to potentially continue making contributions to your pension.
Income protection policies will typically stop paying you an income when you reach State Pension age.