What will happen to my pension if I have been furloughed?

6th January 2021

If you have been on furlough, it’s not just the immediate financial consequences that may concern you. Understandably, you may have questions pertaining to your pension and how furlough may affect it.

Furlough was originally implemented so that the Government would pay 80% of an employee’s salary, up to £2500 a month, this included pension contributions. Some employers have then topped this up to ensure their employees still get their full income, however not all have and if you have been earning less than your usual income your pension contribution may well be affected.

Pension contribution amounts are based on qualifying earnings, the first £120 of weekly pay is not counted towards pension contributions, therefore if an employer is not topping up the 80% furlough this may leave employees up to 25% short on their pension contributions whilst in receipt of the furlough payments.

Initially, the Government were paying the 3% pension under their Jobs Retention Scheme, however this was changed in August, when employers were to resume the payments and the Government phased in changes to furlough payments over the proceeding months further reducing them.

What position you are in with regards your pension will very much depend on how much you earn, what you have been paid and if you have been able to afford to pay your contribution on a reduced wage. It will also depend on the type of pension scheme you have, that may be a standard payment of 3% from your employer and 5% from your wages each month or you may be in something like a salary sacrifice scheme.

There was a worry that employers would make the wrong calculations and break regulations in relation to the pension contributions and furlough, though this is likely to be unintentional it is worth checking your pension has continued to be contributed to correctly.

The issue can be very complex in some circumstances, it is certainly something we would advise you check and consider. If you need assistance our independent financial advisors can help. You can contact them on 01392 346464 or e-mail