Private Pension Plans for Self-Employed

As a self-employed worker, you might not have a workplace pension (or any type of pension, for that matter) to fall back on for retirement. This is all the more reason why, if you’re self-employed, it’s important to start saving for retirement as soon as you can.

But where do you save your hard-earned cash and how much should you contribute into a personal pension plan if you’re self-employed?

We’ve answered these questions and more to help you understand private self-employed pensions and how they can provide the income you need when you reach retirement.


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We can arrange a free pension review for you today

70% of customers who have a pension review find a better deal

Are there private pension schemes for the self-employed in the UK?

Yes, most definitely. There are a number of different types of private pension schemes available for the self-employed, most of which are pretty flexible. They can allow for either regular contributions or ad hoc payments, which can be quite useful if you’re self-employed and your income can vary from month to month.

So, what are the different types of pension plans that might be available to you if you’re self-employed?

We go into this below.


Stakeholder personal pensions for the self-employed

A stakeholder pension could be an option for you if you’re a  self-employed sole trader or contractor looking to save for your retirement.

This type of scheme – like all personal pension plans – is a defined contribution pension. This type of funds allows members to contribute both regular and lump sum payments.

The key benefit of a stakeholder pension is that they typically have low and flexible minimum contributions with capped charges.

If you’d like to know more about stakeholder pensions, get in touch and we will arrange for an advisor we work with to speak with you directly.



A SIPP is a form of personal or private pension which can offer a greater degree of investment opportunity and choice in comparison to a traditional pension provider.

Members have greater freedom and can decide how and where their pensions are invested, making this a popular choice for anyone looking for more control over their retirement fund.

Sectors available to invest in may include international shares, investment trusts, commercial property and more.

To learn more about self-invested personal pensions take a look at our SIPPS guide or make an enquiry and an expert will get in touch to discuss this option in more detail.


Workplace pension for self-employed

Another potential option would be a NEST (National Employment Savings Trust) pension.

This pension scheme was created by the government and although this is usually offered to employed workers, some self-employed contractors may be eligible to join. There are associated charges which are payable for NEST members but these can be lower in comparison to private pension funds.

Your choice of pension can have a huge effect on your income during retirement, so it’s important to find the best plan for you.

A pensions advisor can search the whole market for you and make a recommendation built around your needs.



Can I pay into a private pension as director of a limited company?

One of the benefits of being a director of a limited company is that there can be beneficial tax benefits when saving into a private pension plan.

Some directors pay their pension contributions directly from their limited company’s income. The maximum annual contribution is £40,000 or 100% of your annual income (whichever is lower), meaning any pension contribution under this is deducted as a company expense and outgoing.

This reduces the overall annual profit for the company which therefore reduces the company’s corporation tax liability.


Are private pensions available for contractors?

Yes, they are. In fact, private pensions are particularly desirable for contractors due to the level of flexibility they provide as the income stream for this area of employment can, at times, prove to be quite sporadic.

It’s always best to check with a professional ahead of opening a pension as they’ll be able to help you find a scheme that is financially beneficial with a level of risk that you’re comfortable with.

For more information, make an enquiry and we’ll match you with an expert so you can discuss your options.



What private pension contributions should I make if I’m self-employed?

The most important factor to consider with pension plans is how much you can comfortably contribute to the scheme.

It’s important to save an amount that benefits your finances in the future but paying more into a pension at the cost of your current financial health could be counterproductive.

It may be helpful to chat with a pensions advisor and work out how much you want to save and the best way to achieve your retirement income goal.

They can look at your current circumstances and advise whether it may be more beneficial to pay off current debts or contribute a lower amount per year.



Can I start a private pension at 40 if I’m self-employed?

Yes, of course. Many self-employed professionals worry that if they haven’t opened up a pension before a certain age then they won’t reap the full benefits, but it’s never too late to start putting money away.

The earlier you start saving the better and this is true regardless of how old you are now.


How much should I save before I retire?

A common measure of making sure you have a ‘healthy’ pension pot, which is sometimes used, is to half your age from when you started saving from, then put that number as a percentage from your income into your pension each month.

As an example, if you were to start a self-employed pension at age 40, you may wish to contribute 20% of your income pre-tax.

If you had an annual salary of £30,000 and could afford to contribute 20%, this would equate to £6,000 a year (£500 a month).

If you were to continue contributing this amount for 25 years until you retire at 65, you would have a retirement fund worth £150,000.

While the above self-employed private pension calculations are for demonstrative purposes only, a pension advisor will be able to help you calculate a more accurate figure and find a plan that works best for you. Make an enquiry to get started.



Should I use a self-employed private pension calculator?

There isn’t a calculator available specifically for self-employed private pensions, though a personal pension calculator can provide you with a rough idea of how much you could receive.

However,  most online calculators won’t factor in other important information such as:


  • State benefits you may be entitled to
  • Other pension contributions you may have made throughout your working life
  • The value of pension benefits
  • Any interest earned through your pension scheme
  • Tax relief

A personal pensions advisor will be able to take other details into consideration when calculating your pension. They can take the time to listen to what you need from your pension and can recommend the best self-employed pension schemes for you.

Make an enquiry to get started.



What is the best personal pension plan for me?

This really depends on your own circumstances and preferences. There are a wide range of pension plans, each with their own pros and cons. Some schemes provide greater opportunities for investment but come with higher levels of risk, while others pay less interest but can be more predictable.

Researching numerous pension schemes can take some time, but there are experts who can do this on your behalf.

In fact, the trained professionals we work with are already well educated on which private pension companies offer greater benefits as well as which ones have flexible minimum payments.



Speak with an expert about your pension

The advisors we work with can help you find the best personal pension scheme suited to your own specific requirements. All advice is free and any information is always given in the strictest confidence.

Call us on 0808 189 0463 or make an enquiry to get started.

We can arrange a free pension review for you today

70% of customers who have a pension review find a better deal

We can arrange a free pension review for you today

70% of customers who have a pension review find a better deal

Tony has worked in a vastly diverse array of areas in the pensions industry for over 2 decades. Tony regularly writes for trade press, usually on topical and pensions pieces as well as acting as a judge at prestigious national events. Tony is also a highly qualified Independent Financial Adviser in his own right. His mantra has always been "Hope for the best, but PLAN for the worst", and believes that the biggest impact that an adviser can have on a client's life journey is to take them on a journey from generally having little or no real idea of what their retirement will look like, to giving them the understanding of what their retirement looks like now, then helping them navigate a path to what they WANT their retirement to be.

Book a free, no-obligation pension review today