Does sick leave affect your pension?

Taking time off work due to illness can be stressful – especially if you’re worried about your short and long-term finances. Here’s what could happen to your pension contributions while on sick leave, and what your options are.

By Louise Cunnah

New

Created on: 05/12/2025

Reading time: 4 mins

Key takeaways

Your pension contributions are based on your earnings, so they may stay the same or go down depending on how much sick pay you’re getting
Employers are legally required to pay you Statutory Sick Pay (SSP) as a minimum if you qualify for it – though they may offer enhanced sick pay to cover the entirety of your wages.
If you’re self-employed, you won’t be able to get SSP and may want to consider other benefits.
Income protection insurance and critical illness cover could help you to keep up your pension contributions, but it’s worth checking if these options are right for you.
Having a Personal Pension (which you set-up and pay into yourself) can make it easy to adjust your pension contributions if your income is impacted.

Taking time off work due to illness can be a stressful experience, especially if you're worried about the immediate and long-term impact on your finances.

After all, what happens to your pension contributions if you’re unable to work? Will this effect how much you end up saving for your retirement?

This situation can bring many questions. So, if you’re wondering, “how does sick leave affect your pension?”, this blog will cover everything you need to know – including how your contributions could be impacted, how sick pay works, and what your options are if you’re self-employed.

Pension contributions while on sick leave

If you’re off work, what happens to your pension will depend on whether you’re receiving sick pay or not – which includes Statutory Sick Pay (SSP), as well as anything extra your employer offers as part of their sickness policy.

This is because the amount you (and your employer) pay in is based on how much you’re earning.

If you are getting sick pay from your employer, your pension contributions:

will stay the same if the amount is equal to your regular wage, or
be lower if you’re being paid less than usual.

This does mean that if you stop receiving sick pay while you’re off, you and your employer will stop paying into your pension pot. However, your contributions should resume automatically if you go back to work or start getting sick pay again.

And remember: any money you’ve already paid into your pension (or benefits you’ve built up – like a guaranteed income for life if it’s a Defined Benefit scheme) will remain yours – meaning they’ll be waiting for you when you retire.^[1]

Do companies have to pay sick leave?

Statutory Sick Pay is mandated by the government – and if you’re eligible for it, your employer will need to give you this as a legal minimum. But you could receive more depending on your employer’s sickness policy, so make sure you check what’s written into your contract.

To qualify for SSP, you’ll need to:

have been off work for at least 4 days in a row (including days you wouldn’t usually work),
earn at least £125 a week (on average) before tax, and
have told your employer you’re sick within 7 days, or the deadline your employer has set.

This above applies to anyone who has completed work for the employer – even if you’re on a zero-hours contact or are an agency worker.^[2]

Statutory Sick Pay

So, how much is Statutory Sick Pay and how long can you get it for?

For the 2025/26 tax year, SSP is £118.75 per week – and if you’re eligible, you’ll receive it for up to 28 weeks. But just FYI, you’ll be paid for every day you’re off sick but would have normally worked, except the first three (this is known as the ‘waiting period’). ^[3]

And like your usual paychecks, this is paid to you in the same way, and things like tax and National Insurance will be deducted from it.

If you’re worried about the impact this will have on your finances, it’s worth checking if you will be limited to receiving SSP. Some companies may offer enhanced sickness pay, which can give your payments a boost while you’re unable to work.

And if this covers your regular wages, you won’t see a reduction in your pension contributions.

Self-employed and Statutory Sick Pay

Do you get Statutory Sick Pay if you’re self-employed? The short answer to this question is “no” – but you could be entitled to other support (which we’ll go into more detail below).

And the long answer? SSP is paid by an employer, rather than the government. And if you work for yourself, you don’t technically have one to foot the bill.

If you’re not entitled to SSP because you’re self-employed, it’s worth checking if you get any other benefits, like Universal Credit or New Style Employment and Support Allowance (ESA) – though it is worth noting that ESA is only available to those who have paid National Insurance contributions for the last two to three years. ^[3]

To check what you could be entitled to, MoneyHelper has a free (and handy) Benefits Calculator. All you need to do is answer a few simple questions, and this will let you know what help you could get and how to go about claiming it.

And if you are worried about your pension contributions while on sick leave, an option to consider is opening something called a Self-Invested Personal Pension (or SIPP, for short). This is a type of pension that you set up yourself, and can pay into as and when it suits you. This can be helpful if you don’t want to commit to a set amount each month due to fluctuations in income.

With Wealthify’s Personal Pension, you can set-up a Direct Debit to put in the same amount each month, or pay in different amounts as often as you feel like.

This means you can carry on building up your retirement fund while you’re off sick, or even reduce or pause your contributions to a level you’re more comfortable with during that time.

National Insurance credits

It isn’t just ESA that’s impacted by your National Insurance record. In fact, whether you’re entitled to the State Pension (and how much you’ll get) is based on your contributions.

To get the full new State Pension in future (which is £230.25 per week, as of the 2025/26 tax year),

you’ll need to have 35 qualifying years on your National Insurance (NI) record – or at least 10 if you want to get anything at all.^[4]

But what even counts as a ‘qualifying year’? Well, it can be any that you paid National Insurance (either through your job or voluntary contributions), or received National Insurance credits due to unemployment, illness, or being a carer for someone.^[5]

If you’re receiving Statutory Sick Pay, you’ll still pay tax and NI. But if your income falls below £125 per week, then you may need to apply for National Insurance Credits to maintain your NI record. ^[1]

If you’re not eligible for SSP but are claiming Jobseeker’s Allowance or ESA, you may also be able to get NI credits. Go to the ‘National Insurance Credits’ section on GOV.UK for more information.

Income protection insurance

If you’re worried about losing income due to illness, income protection insurance could act as a valuable safety net, as this will provide regular payments if you’re unable to work.^[6]

Although they can differ between providers, typically, these policies:

apply to most illnesses and injuries that leave you unable to work,
will cover between 50% and 65% of your income,
allow you to claim as many times as you need, and
will pay out until you start working again, retire, or the policy ends.

Not only can this provide some reassurance if you’re worried about covering your basic expenses now, but it can also help you maintain your pension contributions for your future retirement fund. This is really easy if you have a Personal Pension (like ours), as you manage these yourself.

When it comes to contributing to your workplace pension, it will depend on your insurance policy, pension scheme, and employer. Some income protection policies will ensure your employer pays in as normal, and you may be able to carry on with your personal contributions, too.^[6]

And if you don’t have income protection insurance already, it could be worth considering a policy like this in the future if you do return to work – giving you peace of mind if you were to fall ill again.

Critical illness cover

For those facing serious health conditions, critical illness cover can also be helpful to have, as it means you could receive a lump sum if you’re diagnosed with certain conditions.

This could be used to cover things like your living expenses, medical costs, and contributions into your pension.

However, as with most things, you’ll want to do some research, as not all providers are the same.

Some will pay out for some conditions, whereas others may not. And your policy will only pay out once, so do keep that in mind.

It’s also worth knowing that your monthly premiums may vary considerably, as these will be based on things like your age, job, current health, and family medical history.^[7]

Retiring early due to ill-health

In some cases, long-term illness might mean you’re unable to return to work. If this happens, you may need to consider an early retirement.

With most workplace and personal pensions, you’ll need to wait until you’re at least 55 to access your money (and this is actually changing to 57 from April 2028).^[8] However, some schemes will let you withdraw sooner if you have a serious or terminal illness.

For more information on your options, check out our guide on early retirement due to ill health.

So, does sick leave affect your pension? This can depend on whether you’re receiving sick pay or any other allowances, and whether you have things like income protection insurance and critical illness cover in place.

If you are worried about pension contributions while on sick leave, having a Personal Pension (like the one we offer) can give you the flexibility to easily pause, up, or lower your contributions at any time – so you can save in a way that suits your changing circumstances.

Your tax treatment will depend on your individual circumstances, and it may be subject to change in the future.

With investing, your capital is at risk, so the value of your investments can go down as well as up, which means you could get back less than you initially invested.

Wealthify does not provide advice. If you’re not sure whether investing is right for you, please speak to a financial adviser.