When life gets expensive, it’s natural to start cutting back on treats, takeaways, or even those streaming subscriptions you barely use. But for a lot of people under pressure, the first thing that comes to mind is reducing or pausing their pension contributions.
According to a Competition and Consumer Protection Commission (CCPC) survey, of those without a pension, 25% said they couldn’t afford to start one,while another 19pc admitted they’d simply ‘put it on the long finger’.
That hesitation is understandable, after all, 84pc of people in Ireland say they’re worried about the cost-of-living crisis, according to a 2025 Ipsos B&A survey for the Irish Human Rights and Equality Commission. But experts warn that pulling back on your pension during tough times can mean missing out on valuable tax reliefs, employer contributions, and long term compounding growth, benefits that are hard to make up later.
Alan Ryan, Managing Director of Paul Ryan Financial Advisors Limited (paulryan.ie), knows this better than most. As a Qualified Financial Adviser (QFA), an Associate of the Irish Institute of Pension Managers (AIIPM), and a Revenue Approved Pensioneer Trustee, he has over 25 years of experience in pensions and investments. He helps people navigate the difficult balance between present demands and future security.
Stopping contributions is understandable but can have lasting negative consequences. Even small, consistent savings are far better than no contributions.
Staying the course
Alan acknowledges that financial stress can make retirement feel like a distant problem, especially when bills are mounting today. But he advises against short-term thinking. “With pensions,there is a tendency to sometimes forget that we are saving over decades. Many people prioritise short-term goals like holidays, new cars and home improvements, but these decisions can undermine retirement security.“
When budgets tighten, Alan encourages people not to ignore the pressure but to handle it smartly. A lot of pension schemes let you pause or reduce contributions if needed, but keeping even a small amount going is what really counts. Consistency is key as pensions are still one of the most powerful ways to build future wealth.
For example, the power of compounding can be extraordinary.
“A €10,000 investment at age 30 growing at 9pc annually until age 75 becomes €483,000. The same investment made at age 40 grows to only €204,000.Those extra 10 years are worth €200,000, demonstrating the impact of starting early and staying invested.“
Avoiding common traps
When times are tough, some people consider dipping into their pension savings early (from age 50 in some cases), which is a decision Alan warns against. Accessing pensions early can significantly increase the risk of running out of money in later years.
This ‘pension bomb out‘ effect leaves many retirees dependent solely on the State Pension. That State Pension will stand at about €299.30 per week, which is “unlikely to be sustainable”. According to the Central Statistics Office (CSO), Ireland’s over-65 population has jumped by more than 40pc and it’s set to double again to 1.6 million by 2051. That’s a lot more pressure on the State Pension. With fewer workers supporting more retirees, the system will need a helping hand. Government plans like auto enrolment will make saving easier, but a little personal planning and consistency now can make all the difference later.
Instead of withdrawing pension funds, Alan recommends looking at other short term solutions, such as temporary budget adjustments, consolidating high-interest debts, or using short-term savings.
Even a short delay of one year in accessing your pension can have a significant impact on your lifestyle in retirement, Our advice would be: the longer you can leave it to access your pension, the better.
Catching up after a pause
If contributions must be paused, there are ways to recover later, though the sooner you restart, the better. It is possible to catch up, but it becomes harder and more financially demanding. Typically, this means higher contributions later in life, usually when disposable income increases as family commitments ease.
The tax system in Ireland makes this easier by allowing higher contribution limits as you age.
“At 60, up to 40% of net relevant earnings can receive tax relief, compared with 20% for a 30-year-old,” says Alan. “If you can start on the pension journey early, it takes all the pressure off when you are in your 50s on catch-up.”
For those feeling squeezed, Alan believes that understanding how tax relief works can be a game-changer. Contributions receive upfront tax relief, investments grow tax-free, and retirees can take a portion of their fund tax-free.
“The industry needs to simplify its language and highlight these benefits more clearly so that individuals feel confident in making use of them. The Government is doing its best with My Future Fund to try to encourage employers and employees to engage in pensions now so that they are not on ‘catch up’ in their 50s and we don’t have a massive pension hole in the economy down the line.“
For savers looking to make their pensions work harder, fees can be a silent drain on retirement funds.
“An investment of €100,000 over 30 years at 8% annual growth with fees of 1.25% annually would result in over €111,000 more in costs compared to fees of 0.75%. That saving is a deposit for a very nice house for the next generation, or worth maybe €4,000 per annum to you in retirement.“
However, he warns that consolidation should be approached carefully. “If you consolidate into a new scheme, you are subject to the rules of that scheme and may not have the flexibility to phase retirement. Always seek professional advice before consolidating. Stay invested, stay diversified, and keep an eye on fees”.
He also suggests avoiding being overly conservative, as this can result in a pension pot too small to meet retirement needs.
Alan adds, “Retirement planning is a decades-long journey. Trust the process, tune out short-term market noise, and focus on consistent, disciplined investing. Tell the 20-year-old version of yourself that they are not going to live forever and that they should engage in pensions; it will take all the pressure off them down the line!“
Secure Your Future by Staying the Course
Even small, consistent pension contributions today can make a big difference tomorrow. Talk to a qualified financial adviser to keep your retirement goals on track.