When you're self-employed, sorting out your pension can often fall to the bottom of the list. With no employer to set one up or add contributions, retirement planning can feel confusing at best, and like a headache at worst.
Like many things which cause us stress and confusion, it’s easy to put retirement planning off. But the problem with this is that the earlier you get started, the more potential there is for control and flexibility you’ll have over your financial future.
In this blog, we’ll explore why pensions matter when you work for yourself, how to take advantage of the tax perks they can offer, and the different options available to you. This way, you can feel more confident that you know how to get the most out of your pension.
Whether you’re just getting started funding your retirement as a self-employed person, or you simply want to boost what you’ve already saved, these tips could help you make the most of a self-employed pension.
- Why retirement planning matters when you’re self-employed
- What pension options are available to the self-employed?
- Things to consider when managing your pension as a self-employed person
- How to keep track of your pension pot
- Could a SIPP give you more control?
- Summary
Why retirement planning matters when you’re self-employed
Being self-employed gives you freedom, but it also means you have to shoulder the full weight of your financial future alone.
There’s no employer to auto-enrol you into a pension or top up your contributions, and an irregular income can make consistent saving seem tricky or out of reach.
Still, it’s important to give your pension some attention, as ignoring this could leave you short later in life. With life expectancy on the rise and the State Pension offering only a modest income, it’s vital to build your own safety net.
The UK Government’s most recent Pension Commission found that over 3 million self-employed are not saving into a pension [1]. To put this into perspective, there were approximately 4.3 million self-employed workers in the United Kingdom in 2024 [2].
And though retirement might seem a long way off, the sooner you start planning, the better your chances of a comfortable future. So, what are the pension for self employed options? Let’s dig in.
What pension options are available to the self-employed?
When you’re self-employed, you’re empowered to choose the type of pension that suits you… But that also means the onus is on you to figure out what works.
Here are the main options for you to consider.
Personal pensions
A personal pension is managed by a provider, who invests your money in a selection of funds. It’s ideal if you want a hands-off approach, and you’ll still benefit from tax relief.
For every £80 you pay into a personal pension, the government adds £20 (if you’re a basic rate taxpayer). And many providers also offer investment pathways that help guide your pension based on your retirement goals.
The benefit of personal pensions is that they are generally simpler to manage and often come with lower fees. But with many providers to choose from, it’s important you do your research.
There’s also Self-Invested Personal Pensions (SIPPs), which are a particular type of personal pension, which we’ll cover in the next section.
Self-Invested Personal Pensions (SIPPs)
As just touched upon, a Self-Invested Personal Pension is a type of personal pension, but with added flexibility.
With some self-select SIPPs, you can choose your own investments from a wide range – including shares, funds and ETFs – and adjust your contributions whenever it suits you.
With a managed SIPP, like the one offered by Wealthify, you can still easily track your pension and manage your contribution amounts in your account, but the actual investment choices are handled by our team of in-house experts. However, you can still select your risk preference, and even opt into Ethical Plans.
Self-select SIPPs are great for people who want control, but they do require time and knowledge if you’re deciding what to invest your money into, instead of having your provider do this on your behalf.
As with all personal pensions, you can also consolidate old pensions and opt-in for the government tax relief top-up on personal pension contributions.
Remember, too, your investments can go down as well as up.
State Pension
You could also qualify for the State Pension, which is based on your National Insurance record. You’ll usually need 35 qualifying years in order to receive the full amount. You can check your state pension age here.
And, to see where you stand in terms of money, check your forecast at GOV.UK.
Things to consider when managing your pension as a self-employed person
When you’re self-employed, managing your pension takes a little more thought.
As a freelancer, you’ll already be familiar with planning out your work in accordance with your own goals and aspirations. And really, the same approach applies here, too.
Think about what kind of retirement you’d like… then work out what it might take to get there. Setting a realistic savings goal can also help you stay on track.
Some people prefer to set up a regular monthly payment, while others pay in lump sums when income allows. Most modern pension platforms let you pause or change contributions easily, so you can adapt to your business needs as required. This is another variation from workplace pensions, where you will usually make monthly contributions, something that is not always suitable for self-employed folks!
It’s also worth understanding the tax benefits. If you pay income tax, the government adds basic rate tax relief (20%) to your personal pension contributions. Higher and additional rate taxpayers can usually claim back even more through self-assessment. Of course, remember that your tax treatment will depend on your individual circumstances, and it may be subject to change in the future.
Every self-employed journey looks different, and so will every pension!
But taking time to understand your options – and how your savings habits today could shape your future – is a meaningful first step.
How to keep track of your pension pot
Staying on top of your retirement fund is easier than ever thanks to online dashboards, mobile apps and pension calculators.
Many pension providers, like us here at Wealthify, now offer digital tools that show how much you’ve saved and how your investments are performing — all in one place.
If you’ve had other jobs before becoming self-employed, you might have pensions scattered across different providers. Combining them into one pot could make it easier to keep track of, but it’s important to check fees and other features before doing so. Some pensions charge for transfers or offer fewer investment options once consolidated.
It’s worth noting, too, that with defined benefit pension pots you cannot reverse a transfer once it’s been made and you may lose key benefits as a result.
The government’s pension tracing service can help you find old pensions you’ve lost track of, especially if you’ve moved around or changed names. It’s free to use and a good place to start if you’re unsure where your pensions are held.
Still looking for more insight? Our guide, “How do I check my pension contributions?” can help you get started.
Could a SIPP give you more control?
If having more say over where your money goes is important to you, a SIPP could be one option to explore further.
Some people want to see exactly how their pension is performing, choose how their money is invested, or switch things around to suit their goals. A SIPP can provide that freedom!
That’s why our Wealthify SIPP is designed to work for you. You choose how you want to invest, and we build a plan that fits — whether you’re Cautious, Adventurous, or somewhere in between. We even have an Ethical Investment Plan if that suits you, too.
Plus, everything is managed by our in-house experts, so you don’t need to be an investing pro to get started. Of course, if you opt-in, you’ll benefit from the government’s basic rate tax relief (20%) on your personal pension contributions which will be added straight to your pot.
Paying in totally depends on you — whether that looks like a regular Direct Debit, or one-off payments that better suit the sometimes choppy income flows of being a freelancer.
Performance can also be tracked in real time, and you can adjust contributions when needed. Our platform fees are simple: 0.6% a year for up to the first £100,000 — and 0.3% for any portion over that. You can find out more about our fees and calculate what they’ll look like for you on this page: our investment fees.
Also, with the option to consolidate pensions from previous jobs, you can keep building on the foundation you’ve laid while still making contributions in a way that suits you as a self-employed person.
Of course, with more control comes more responsibility, so it’s important to be confident in your decisions or get formal advice if you’re unsure.
Summary
Going it alone means alone means both flexibility and responsibility. While being self-employed puts you in the driver’s seat when it comes to your pension – it also means there’s no one else sat in the passenger seat, helping with navigation.
Whether you’re new to saving for a pension or already have a pot in place, taking the time to explore your options can pay off in the long run.
From personal pensions to SIPPs, in this blog we’ve covered how to make the most of your pension, and found that there’s no one-size-fits-all solution. The key is to start where you are and build from there.
Think about what you want your retirement to look like, set a goal, and make the most of the tax perks on offer. And if you are looking for flexibility and more control over how your money’s invested, then a SIPP could be worth your consideration.
Taking stock now could mean more security for future you. Ready to explore how a SIPP could work for you? Click the banner below to get started.
Please remember the value of your investments can go down as well as up, and you could get back less than invested.
Your tax treatment will depend on your individual circumstances, and it may be subject to change in the future.
Wealthify does not provide financial advice. Please seek financial advice if you are unsure about investing.
