Why you should open a pension plan if you're self-employed

Becoming self-employed can be exciting, but there's a lot more to do for yourself. Whether you’re sorting out your taxes or working up contracts for your clients, you'll have a lot more admin on your hands. But it's still worth taking the time to explore your pension options and think about how best to save for your retirement.

If you've been employed before, you may have been enrolled into a workplace pension - possibly several. But now that you're self-employed, nobody will be making provisions for your retirement. So it's up to you to think about the best way to keep your pension savings going.

You'll need a personal pension that fits your new lifestyle. Our Personal Pension is simple to pay into, lets you start and change payments whenever you need to, and is quick and easy to set up online. Find out more about our Personal Pension.

Please note that if you’re self-employed through a Limited Company or Partnership, we can’t accept contributions directly from your company. And you need to make all your contributions net of income tax.

 

Eligibility for the State Pension if you're self-employed

If you're self-employed you'll be eligible for the State Pension as long as you’ve paid at least ten years of National Insurance (NI) contributions. To get the full State Pension you'll need to have paid at least 35 years NI contributions.

The maximum State Pension is £179.60 per week (as at tax year 2021/22). That's £9,339 a year, which might not cover all your living expenses. For comparison, a recent survey by Which found that retired households with two people spent just under £2,170 a month / £26,000 a year on average.

How to start a personal pension when self-employed

First, you'll need to find the provider and product that are best for you. If you're not sure what you're looking for, think about getting some financial advice. A financial adviser can help you decide what you'll need in retirement and how best to save into your pension pot. Find an adviser near you with Unbiased.

Once you've found the right product, you'll need to open your personal pension. Many providers let you do this online.

 

Making the most of your previous pensions

You can make managing your old pensions simpler, and potentially more cost-effective, by transferring them into a single, combined personal or private pension.

Before transferring any pensions, you should check that this is the right approach. Not all pensions can or should be transferred, particularly those with Guaranteed Minimum Benefits.

If you're not sure where the pensions you want to transfer are, we offer a pension tracing service which can help take the hard work out of finding your lost pensions. This is available to our Personal Pension customers at no extra cost.