What can I do if I can't afford to pay regularly into my pension?

9 May 2016


I am approaching my 54th birthday and by rights I should be putting 27% of my salary into my pension.

Unfortunately, I cannot afford to pay into my pension on a regular basis. Instead, every so often I make a large payment into my pension of, say, £25,000. However, according to pension forecasts, these payments don’t seem to make a great difference to my retirement income. Why is that?

Would I be better off keeping the money in a savings account?



It is good that you are focused on your retirement planning; at 54, you need to be. Many people in their 40s and 50s will be facing a serious shortfall in their pension provision if they have started saving too late or haven’t saved enough.

You appear to have given this some real thought, coming up with the 27% figure. I assume this is based on the general rule of thumb that you should pay in a percentage worth half your age when you start saving into a pension.


As you say you can’t afford to put 27% of your salary into a pension, you need to look at your other options.

The starting point is that it is better to be saving something rather than nothing at all and the more you’re able to save the stronger position you’ll be in.


Changes to the state pension and means-tested benefits mean that most people will benefit from the savings and investments they manage to accumulate. So please don’t get disillusioned and give up if you’re not able to save 27%.

Save what you can into your pension and make sure you are investing in assets that reflect your circumstances, objectives and attitude to risk. You need to get the right balance of investments, because in your situation capital protection is likely to be as important as capital growth.


Think about whether you can make any compromises to your retirement planning, remembering to take account of the state pension and any other savings or investments you have as well. Could you survive on a lower level of income or could you stop working at a later date?

Planning for retirement is too important to get wrong and so, if you’re not entirely sure what you’re doing, you should take independent financial advice.