Self-Employed Pensions Calculator

If you’re self-employed and want to understand how much you need to save into a pension in order to receive the income you need in retirement, an online calculator can be a very effective tool to help provide you with this information.

This article takes a closer look at the variety of details that can be gleaned from pension calculators and how it may be useful if you’re self-employed:

If you’re wanting to set up a self-employed pension, give us a call on 0808 189 0463 or make an enquiry. We will match you with one of the independent financial advisors we work with.

They will be happy to answer all your questions and, with access to all the pension providers in the UK, have all the experience and tools needed to calculate what you need to save for the retirement fund you require.

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

Self-employed pension calculator: why it’s important to plan ahead

The great thing about being self-employed is the freedom to be your own boss. This also has its drawbacks. For example, employees (particularly within large organisations) have a network they can fall back on for all their income-related queries, such as pension planning.

When you’re self-employed, it can be hard to think about retirement when your main focus is on building your business. Problem is, if you don’t do it, nobody else will do it for you.

This is why planning ahead and saving into a pension sooner rather than later is vital if you’re to have enough income for when you retire.

A pension calculator can be very useful, particularly for those of us who are self-employed, as they can illustrate the cost of delaying your retirement planning, as shown in this simple example below.

Age Pension contribution (per month) Age at retirement Fund at retirement
25 £150.00 60 £109,219.16
30 £150.00 60 £88,028.84
35 £150.00 60 £150,000

(For illustration purposes only, based on a fund performance of 6% per annum, 2% annual inflation and 0.75% annual management charge)

As you can see from this table, delaying your retirement planning can make quite a big difference to your overall pension fund. Delaying the time you start saving for your retirement, ultimately means you will have less income to drawdown when you decide to stop working.

If you’d like to see some different illustrations, based on your own personal circumstances, give us a call on 0808 189 0463 or get in touch and we can arrange for an advisor we work with to provide this information for you.

 


 

Can I calculate what pension contributions I need for a set income in retirement?

Yes, absolutely. In fact, whether you’re self-employed or not, working out what pension contributions you need to make in order to achieve a particular fund size or retirement income is one of the key benefits of using an online calculator tool.

The table below illustrates three different retirement income examples and the pension contributions required. This is based on someone who is currently 25 years old with a target retirement age of 65.

Target retirement income Monthly pension contributions required
£15,000 £480
£18,000 £579
£20,000 £640

(For illustration purposes only, based on a fund performance of 5% per annum, 2.5% annual inflation and 0.75% annual management charge)

If you’re looking to start a pension and have a specific target retirement income in mind, make an enquiry and we can arrange for an expert to get in touch and show you what contributions will be required in order to achieve this amount.

 


 

Can I use a calculator to work out tax relief on my pension contributions?

Yes, this is possible. All UK pension contributions benefit from the addition of tax relief, which increases the overall amount invested and is based on your marginal rate of income tax.

The table below provides a number of different examples to illustrate how this works (earnings and tax-rates based on current tax year 2019/20).

Net profits from self-employed earnings Your net monthly pension contribution Basic-rate tax relief Higher-rate tax relief you can claim Gross monthly pension contributions
£30,000 £400 £100 £0 £500
£50,000 £600 £150 £0 £750
£100,000 £1000 £250 £0 £1500*

(* = Higher-rate tax relief is reclaimed via self-assessment and can be added to your fund or, in effect, reduces your actual contribution by this amount, therefore, in the example above, the actual net contribution would be £750 rather than £1,000)

 


 

Self-employed pension calculators: are they easy to use?

Yes, they are usually very straightforward. The type of information you would be expected to input for an online pension calculator would be:

 

  • Your age
  • Retirement age
  • Current income/self-employed earnings
  • Target retirement income
  • Pension contribution

Online pension calculators are usually very flexible and allow you to change information freely in order to produce different examples.

It is important to stress that an online pension calculator can only provide indicative information.

If you require further details it is recommended to get in touch with an independent pensions advisor who can provide assistance tailored to your specific requirements.

 


 

Speak to a personal pension expert

There are many different types of pension calculators freely available online. They are usually very easy to use and can provide lots of useful information.

However, if you wish to get expert pensions advice at the same time as understanding what you need to save for your retirement, give us a call on 0808 189 0463 or make an enquiry.

We’ll match you with one of the expert financial advisors we work with. All the experts we work with are independent, and have access to all the pension providers in the UK.

They will be happy to answer your question and help you find the best type of calculator tool suited to your own specific requirements, or make the calculations for you.

All advice is free and any information is always given in the strictest confidence.

 

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

Book a free, no-obligation pension review today