Pension Payments?

Question

Hi
I have been in a pension scheme for approx 9 months, where money is deducted from my pay every month, and my employer matches it.
I was wondering if there is a possibility to freeze these payments for 3 or 4 months as i am a little short of cash at the moment, i dont intend to close the pension, just stop paying for a small amount of time until im back on my feet
Surley i can do this??
Thanks

Anonymous · Accepted Answer

probably not , but you should ask your employer

Steve B · Answer

Most Pension Schemes these days are known as a 'money purchase' (aka defined contribution) scheme**  - if yours is one of these, then, at a guess, yes .. go speak to your HR Dept.

NB. Unless you are close to retirement age, you should consider very carefully the effect of stopping .. each 10 years from retirement, your contributions are worth (roughly) double 

.. so if you are eg. 25 (and plan to retire at 55) thats 20 years = 2 x 10 years and equal to 'two doubles' (2x2 = 4) ... 

... which means every month you stop paying now will 'cost' you the equivalent of 4 months lost contributions when you retire ..

PS You know, of course, that if you stop making contributions, your employer will also stop...


**If the scheme is a 'final salary' type then they may insist you leave and rejoin later (and you will loose out even more..)

Steve · Answer

If these are contributions to a defined benefit plan or traditional pension, then I doubt that you can stop making contributions.

However, if this is a defined contribution plan or 401k plan, then you have the right to adjust the amount that you contribute.  If you  suspend the contributions, it will hurt in the long term.  I'm guessing that it will take at least a month for the contributions to stop once you put in the request to suspend the contributions.

If this is just a short term need, you would probably be better getting a second job that you can quit easily.

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Pension Payments?

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