How to Catch Up on Years You Didn’t Contribute to Your Pension

A clear, factual guide for Muslim savers thinking about long-term retirement planning

Many people reach a point in life where they look back and realise there were several years when they did not contribute to a pension. This is common across the UK population and can happen for many reasons — studying, raising children, caring for relatives, facing periods of unemployment, working part-time, or simply not being enrolled into a pension at certain jobs.

For Muslim savers, there are sometimes additional concerns. Some traditional pension funds invest in interest-bearing bonds or companies involved in activities that Islamic finance principles do not permit. Research from Islamic Finance Guru and analysis cited in the UK government’s revived Pensions Commission announcement suggests that a lack of Shariah-compliant options has contributed to lower participation among some Muslim groups.

This article does not give financial advice, but it aims to explain why contribution gaps happen, what research says about their effects, and what options people often explore when they want to re-engage with pension saving in a way that aligns with their values.

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1. Why Pension Gaps Happen

UK evidence shows that pension gaps are common, and they happen for a wide range of practical reasons.
Research from the Institute for Fiscal Studies (IFS) and the Pensions Policy Institute (PPI) highlights several recurring factors:

Time out of work

People often stop contributing when they experience unemployment, periods of caring for children or elderly relatives, or breaks from paid work.

Low or unstable earnings

According to both the IFS and PPI, workers with low or fluctuating income may fall below the automatic-enrolment thresholds, meaning they are not brought into workplace schemes.

Opting out because contributions feel unaffordable

Surveys have shown that some people opt out of auto-enrolment, especially during financially pressured periods.

Frequent job changes or insecure work

The PPI notes that people in sectors with high turnover or limited pension provision often have patchy saving histories.

Self-employment

IFS analysis shows that self-employed workers are significantly less likely to save into pensions because they are not covered by automatic enrolment and must set up contributions themselves. Irregular income, business costs and the lack of employer contributions all contribute to low participation among the more than three million self-employed workers in the UK.

Lower participation among some ethnic minority groups

Government statistics referenced in the new Pensions Commission announcement show that only about one in four workers from Pakistani or Bangladeshi backgrounds contribute to a pension, compared with higher proportions among White workers. Research from the IFS and The People’s Pension finds that this gap is linked to lower average earnings, higher rates of part-time or self-employment, and — for some Muslim savers — concerns about Shariah-compliance.

Gaps therefore reflect a combination of economic, structural and personal circumstances. They are not unusual, and they do not mean someone cannot take steps to understand their situation going forward.

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2. How Contribution Gaps Affect Pension Outcomes

Research consistently shows that contribution gaps influence expected pension outcomes, although the exact effect varies across individuals.

Impact over a working life

The IFS has found that private-sector employees with years of low or zero contributions tend to reach retirement with smaller defined-contribution pension pots than workers with uninterrupted contribution histories. This difference is driven not only by missed contributions, but also by missing out on employer contributions and tax relief during those years.

Wider effects on groups who save less

The PPI’s work on “under-pensioned” groups shows that women, some ethnic minority communities and the self-employed are likely to reach retirement with lower private pension wealth on average. The UK government’s 2025 Pensions Commission announcement also highlights a gender private-pension wealth gap of around 48%.

How many people are on track?

Industry analysis summarised by Scottish Widows and the PPI suggests that around 38–39% of UK adults are not on track for even the “minimum” retirement living standard, with irregular or insufficient contributions identified as a central factor.

These findings do not predict individual outcomes, but they do show that pension gaps are linked to lower average retirement resources at a population level.

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3. What the Rules Say About Making Voluntary Contributions

HMRC guidance explains that individuals can make voluntary or additional contributions to workplace or personal pensions — including SIPPs — within tax-relievable limits.

How tax relief works

• The maximum tax-relievable contribution in a given tax year is the lower of a person’s relevant UK earnings or the annual allowance.
• There is a smaller fixed allowance for those with little or no earnings.
• Very high earners may be subject to a tapered annual allowance.
• In “relief at source” schemes, providers claim basic-rate relief and add it to the pot; higher-rate taxpayers normally claim extra relief through self-assessment.

Research by Nest Insight and the Pensions Policy Institute notes that while voluntary contributions cannot erase past gaps, contributing within HMRC rules can support higher projected outcomes for those who previously saved little.

These rules apply to all savers and do not constitute advice. Individual circumstances determine whether voluntary contributions are suitable.

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4. What People Often Do When They Want to Re-Engage

People respond to pension gaps in different ways depending on their circumstances. Research and industry surveys show that common steps include:

Reviewing existing pension pots

Many people begin by checking what pension arrangements they already have, especially if they have changed jobs frequently.

Increasing regular contributions when possible

Some individuals gradually increase contributions if their financial situation allows it.

Making occasional one-off contributions

Others add lump sums when they have surplus income.

Consolidating pensions

Some choose to bring multiple pots together for simplicity, although this depends entirely on scheme rules and may not suit everyone.

Using Shariah-compliant pension structures

For Muslim savers who previously avoided pensions due to concerns about riba or prohibited sectors, Shariah-screened pension options — including halal SIPPs — may make it easier to re-engage. These portfolios typically exclude interest-bearing instruments, screen companies for permissible business activity, and apply financial-ratio filters as per commonly used Shariah screening methodologies. Some providers also publish Shariah reports and purification processes.

None of these steps are recommendations — they represent patterns observed in research on pension behaviour.

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5. Questions to Ask Yourself Before Making Any Changes

Because every situation is different, researchers and financial educators often suggest starting with reflection rather than action.
Useful questions include:

• What level of income might I want or need later in life?
• What pension assets do I already have, and are they invested in a way I am comfortable with?
• Can I afford to contribute more without affecting essential expenses?
• Am I eligible for employer contributions that I am not currently receiving?
• Do I prefer a pension option that gives clear visibility over how funds are invested?
• Would professional advice help me understand my choices?
  
  

These questions do not guide you toward any specific decision but can help clarify your priorities.

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6. Conclusion — It’s Not About “Catching Up Perfectly”

Gaps in pension saving are common and often reflect normal life events, financial pressure or — for many Muslim savers — a lack of confidence in whether pension investments are halal. UK evidence shows that consistent saving, employer contributions and tax-relieved payments generally influence retirement resources, but every person’s circumstances differ.

If you are exploring Shariah-compliant ways to re-engage with pension saving, you may find it helpful to learn more about how a halal SIPP — such as the one offered by Wahed — is structured, screened and overseen. Understanding your options can be a first step towards aligning your long-term financial planning with your values.

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Required Disclaimer

This article is used for informational purposes only – not financial advice or recommendation.SIPP investors should ensure that they are happy to make their own investment decisions and understand that all investments can rise and fall in value. Your capital is at risk and you may get back less than you pay in. You’ll need to be at least 55 (rising to 57 from 2028) before you can access the money in your pension. Pension and tax rules can change and any tax relief and benefits will depend on your personal circumstances. If you’re not sure what’s best for your situation, you should seek professional financial advice..

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