Moves to allow a pension contribution holiday for the next year are necessary for many, fund managers say, but they urged workers to keep paying in if they can afford to.Curtis Dickinson, the finance minister, said on Wednesday that the planned mandatory suspension up to June 30, 2021, would bring relief to cash-strapped households and businesses.He announced a similar suspension of social insurance payments, which feed the Contributory Pension Fund, the source of government pensions. The announcement comes hard on the heels of an amendment that allows individuals to withdraw up to $12,000 from their occupational pension funds to help them deal with economic strain caused by the Covid-19 crisis.Employees pay 5 per cent of their wages into their occupational pension, an amount matched by employers, under National Pension Scheme rules brought in 20 years ago.Although the relief measures have raised concerns about the adequacy of retirement funds, pension plan managers appreciate the need for them as thousands contend with the impact of layoffs and pay cuts.Miguel Da Ponte, senior vice-president at BF&M Investment Services Ltd, said: “We are fully supportive of the Government’s decision to allow this temporary holiday in contributions to provide much needed relief.“In effect, it’s a temporary 5 per cent pay rise. As an industry we have to accept these are extraordinary times, which call for unique solutions to get the economy going again. “Obviously, anytime you pause contributions to your retirement savings you are potentially reducing the total value available to you at the time of retirement; however, everyone’s retirement preparedness is unique.”While the pension and social insurance contribution holiday is mandatory, Mr Dickinson’s proposal allows for employers and employees to make voluntary contributions.Mr Da Ponte said that those unsure of whether to keep paying in should review their financial situation.“If you are lucky enough to still be working, in a good financial situation and have the ability to continue to save, then you would best be advised to continue doing so,” Mr Da Ponte said.“More specifically, people should consider whether they can meet their necessary expenses — food, shelter, health, et cetera. If you can meet those, do you have your six-month, emergency-bill payment fund fully restocked?“This is something we regularly advise people: if possible, save, in cash, enough to cover six months’ worth of all your bills.”Lisa Jackson, vice-president operations, Argus Bermuda, said the Government had made a difficult choice to provide short-term financial support to those in need during a crisis that had hit the community hard. Ms Jackson added: “As compulsory private pensions are still fairly new to Bermuda, in comparison to other jurisdictions, relief measures of this nature will have a greater impact on those closer to retirement due to their diminished earning potential. In our experience, people who withdraw from their pensions during employment, are not likely to replenish their account in the future.”Ms Jackson said it may be in someone’s best interest to make voluntary pension contributions during the suspension period, although every case was unique.“Before making a decision, it is important that you understand the implications of ceasing contributions, based on factors such as your age, how close you are to retirement, your life expectancy and your current financial position,” she added. Both Argus and BF&M said many clients had already inquired about the $12,000 withdrawal opportunity.“Understandably, the option has generated considerable interest and we await the final regulations from the Pension Commission to better address pension members’ queries,” Ms Jackson said.Mr Da Ponte said: “We are preparing to make the process as smooth as possible once people start applying, so that we do our part in getting the funds into the hands of people who need them as soon as possible.”The island’s ageing population makes the ability of residents to support themselves in retirement especially important.One in four residents will be over 65 by 2026, according to a government population projection, or 15,800 people, which is about 5,000 more seniors than there were in 2016.The increasing number of pensioners will put a growing strain on the Contributory Pension Fund, which takes in social insurance payments and pays out government pensions.An actuarial report in 2017 concluded that the fund is likely to run out by 2047. The social insurance payments that are due to be suspended amount to $71.84 per week, split evenly between employer and employee. The maximum government pension benefit is about $1,545 per month, Mr Dickinson said in March this year.The amount received by any individual will depend on total contributions and number of years in the plan.Mr Dickinson said on Wednesday: “The Government is mindful of the long-term implications on a plan member’s retirement income in permitting such suspensions. “However, this must be balanced against the immediate and urgent needs in our community that have resulted from this unexpected crisis.”