Pension Plans for the Self Employed

Get in touch for a fee-free, no-obligation chat about how we might be able to help you.

What's On This Page?

Get In Touch

1 Step 1
Tick this box if you want your details to be stored on our database, which may then be used for marketing purposes.

The internet is not a secure medium and the privacy of your data cannot be guaranteed.

Pension Plans for the Self Employed

Pension Plans for the Self Employed​

Michelle Strelley talks us through self-employed pensions.

Why is it important for self-employed people to set up a pension?

Like anybody setting up a pension, it means you won’t be relying on the state pension. As we know, it’s not a great deal. Setting up your own makes sure you have good funds for retirement, so that you can enjoy yourself, go on those cruises you’ve always talked about and so on.

It can be a very tax efficient thing for a self-employed person to do. For example, if you were teetering around the basic taxpayer limit and could hop into the high rate tax bracket, making pension contributions might push you back down to the lower rate.

It’s all about planning for the future, and self-employed people don’t have an employer contributing into a pension for them. It makes sure you are putting in place a good pension plan for the future.

What is the most suitable pension for the self-employed?

It will be based on your individual circumstances. We would look at an individual’s attitude to risk, their circumstances and how much they want to pay. It is very much tailored to you as an individual.

What’s the process for setting up a pension?

Speak to me as a financial advisor and we’ll have a look at your situation. We’ll look at what you have in place already, the income you’ve got and what we can do. We can explore whether you need it to work tax efficiently for you, then we can get something set up.

Does it matter if you are a sole trader, a partner or a limited company director?

Generally, no, because what you get is tailored to you as an individual. However, a limited company director might make his or her monthly contributions as a deductible business expense, for tax efficiency.

You can discuss with your accountant and ourselves about how to make it work for you tax efficiently.

Speak To an Expert

Aitana Financial Services was established in 1993, and today we cover the whole of the country, focusing on giving the best advice for your circumstances. We really pride ourselves on the quality of our advice, and it’s the reason we’ve grown through recommendations from happy clients.

How much should the self-employed save for a pension?

You need to think first of all about what you want your retirement to look like. There are lots of facts and figures out there about how much would make a comfortable retirement, but also you need to think how much an employed person in a similar role to you will be putting in – including contributions from their employer.

That’s a good benchmark to use. Self-employed people aren’t benefiting from a company paying in for them, so they’ve got to do more themselves.

How much state pension will I get if I am self-employed?

As long as you’ve made your full National Insurance contributions, you’ll get a full entitlement. You can check how much you’re likely to receive with something called a BR19 – just Google ‘what state pension I’m entitled to’ for details.

Is there anything else to consider if we’re self-employed and looking to set up a pension?

Definitely speak to a financial advisor. We will help you get the right pension and also, with our regular reviews, we can make sure your money is still working for you. If anything changes in your circumstances we can make changes as we need to.

It’s definitely worth having a relationship with a financial advisor for your retirement. We base it on your attitude to risk at the time – but things can change in your circumstances and you might feel that you could take on a little more risk. Perhaps you haven’t got children at home anymore. Or, it might be the opposite and you want to have less risk. So it’s definitely worth having regular conversations with an advisor.

The value of pensions & investments and any income from them can fall as well as rise. You may not get back the amount originally invested.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen

The information on this website is for use of residents of the United Kingdom only. No representations are made as to whether the information is applicable or available in any other country which may have access to it.

Approved by the Openwork Partnership on 31st March 2023