diff --git a/lib/clusterproxy/cluster_utils.go b/lib/clusterproxy/cluster_utils.go
index 0aa7ce2..b4050e5 100644
--- a/lib/clusterproxy/cluster_utils.go
+++ b/lib/clusterproxy/cluster_utils.go
@@ -34,6 +34,7 @@ import (
 	"k8s.io/client-go/rest"
 	"k8s.io/client-go/tools/clientcmd"
 	clusterv1 "sigs.k8s.io/cluster-api/api/core/v1beta2"
+	"sigs.k8s.io/cluster-api/util/annotations"
 	"sigs.k8s.io/controller-runtime/pkg/client"
 
 	libsveltosv1beta1 "github.com/projectsveltos/libsveltos/api/v1beta1"
@@ -103,12 +104,7 @@ func isCAPIClusterPaused(ctx context.Context, c client.Client,
 		return false, err
 	}
 
-	paused := false
-	if cluster.Spec.Paused != nil {
-		paused = *cluster.Spec.Paused
-	}
-
-	return paused, nil
+	return annotations.IsPaused(cluster, cluster), nil
 }
 
 // isSveltosClusterPaused returns true if Cluster is paused
diff --git a/lib/clusterproxy/cluster_utils_test.go b/lib/clusterproxy/cluster_utils_test.go
index 94f26cb..9db1096 100644
--- a/lib/clusterproxy/cluster_utils_test.go
+++ b/lib/clusterproxy/cluster_utils_test.go
@@ -113,6 +113,22 @@ var _ = Describe("Cluster utils", func() {
 		Expect(paused).To(BeFalse())
 	})
 
+	It("IsClusterPaused returns true for a CAPI Cluster with the paused annotation and Spec.Paused set to false", func() {
+		paused := false
+		cluster.Spec.Paused = &paused
+		cluster.Annotations = map[string]string{clusterv1.PausedAnnotation: ""}
+		initObjects := []client.Object{
+			cluster,
+		}
+
+		c := fake.NewClientBuilder().WithScheme(scheme).WithObjects(initObjects...).Build()
+
+		isPaused, err := clusterproxy.IsClusterPaused(context.TODO(), c, cluster.Namespace,
+			cluster.Name, libsveltosv1beta1.ClusterTypeCapi)
+		Expect(err).To(BeNil())
+		Expect(isPaused).To(BeTrue())
+	})
+
 	It("GetSecretData returns kubeconfig data", func() {
 		randomData := []byte(randomString())
 		sveltosSecret := corev1.Secret{