Pensions For The Self-Employed

According to National Employment Savings Trust, only 24% of self-employed people are saving into a pension, leaving 76% of self-employed alarmingly unprepared for retirement.

We all understand why it is important to save for retirement – not least the UK government, who have made it a legal requirement for every UK employer to enrol their staff into the Workplace Pension scheme; however, they have left up to the self-employed to decide whether they save into a pension.

In the early years of my career as a freelance director-of-photography, I was too distracted by the day-to-day challenges of being self-employed to give saving for my retirement much thought.

I believed I was being sensible by transferring a proportion of my revenue into a savings account to ensure I can pay my annual tax bill – although, I would dip into this whenever I was low on cash.

While permanent employees save for their retirement from their first day at work, the self-employed rarely consider it until later on in their careers, which can cause financial problems at retirement age.

As the founder of the innovate work platform YellowWork and understanding how important finance management is for the self-employed, I have teamed up with financial service experts with a special interest in the self-employed. Together, we’ve made it our mission to make financial services more easily accessible.

To find a suitable pension that enables you to make affordable regular or ad-hoc payments, connect with a specialist financial advisor today.

We are some details that you might like to know if considering a self-employed (personal) pension:

Without a Personal Pension, the maximum State Pension that you would currently receive is only £179.60 per week (2021/2022), and the State Pension age is rising.

With a personal pension, you’ll have the option to pay however much you like. Your pension provider can also claim tax relief and can add it to your pension pot. Here are some more benefits that you will receive:

  • You get a 25% tax top-up from the government (if you pay in £100, the government effectively adds £25 to your pension)
  • Good pension plans give you low-cost access to professional investment managers, who invest your money in a range of assets. This is considered to be a sensible way of managing risk
  • If you die before 75, your pension can usually be passed on to your beneficiaries as a lump sum without inheritance tax deductions
  • New pension rules provide more choice in what you do with your pension savings when you reach retirement, including taking up to 25% as a lump sum without paying tax

These are all reasons why pensions are great for long-term saving. You should also be aware that you could be charged tax if you pay above £40,000 per year. See the Annual Allowance and Lifetime Allowance on the .GOV website or speak to an expert financial advisor for more details.

If you would like a free consultation with a specialist financial advisor to discover the best saving options for you, connect with us today.

Written by Richard Jeffs
Former freelance TV Producer and Director of Photography. Now Founder and CEO of

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