Self-Employed and Pension



You've been Self-Employed for sometimes now and thriving your business is doing well and it is time to look toward your future and we might add your business may not be doing so well but you getting income regularly you can also start looking toward your future and start saving for your pension in a Personal Pension Plan.

As self-employed you cannot contribute to a government pension scheme or enrolled in auto-enrolment pension scheme as yet. The government is thinking of rolling out that plan for self-employed people but not just yet it is in the pipeline.

Hence what you can do for now is to set up a personal pension to save for your retirement. Personal Pension scheme offer you the possibility to add regular contributions or make ad-hoc payments into your self-employed pension pot, and your pension provider will claim tax relief at 20% and add it to your pension pot.

Why it’s important to have a pension if you’re self-employed

Almost 80% of employees are paying into a pension, amongst self-employed workers the figure is depressing as only 18% pay into their pension pot. Employers are obliged to automatically enrol their employees into a workplace pension scheme, however, if you are self-employed then it up to you to make arrangement to start a pension.

This means that many self-employed people may struggle to make ends meet in later life, as the maximum state pension is currently £155.65 a week, and the state pension age is no longer 65 but you can work as long as you want. You'll want more than the state pension when you reach the state pension age so it good to start saving now if you do not want to struggle when you reach old age.

Pension saving is an important consideration if you’re self-employed, and Personal Pensions come with some unique benefits, including:

  • You get at least 20% pension tax relief from the government, so if you pay in £8,000, the government effectively adds £2,000 to your pension.

  • Good pension plans give you low-cost access to professional investment managers who invest your money in a range of assets, which is 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 freedom rules mean that you’ve got more choice over what you do with your pension savings when you reach retirement, including taking up to 25% as a lump sum without paying tax.

Type of Personal Pension

There are different type of Personal Pension you can access they include:-

Stakeholder Pensions - They must meet specific government requirements, for example limits on charges

Self-invested Personal Pensions (SIPPs) - This type allows you to control the specific investments that make up your pension fund.

If you interested in looking into Personal Pension make sure that you check that your provider is registered with the Financial Conduct Authority (FCA) or the Pension Regulator if it's a stakeholder pension.

What is a Personal Pension in a nutshell

A personal pension are pensions that you arrange yourself. They are sometimes known as defined contribution or 'money purchase' pensions and you'll usually get a pension that is based on how much was paid in.

In conclusion

if you are self-employed and setting up a private pension, you may want to start by finding any old workplace pension that you contributed too and personal pensions you started but abandoned and have the amount saved so that you can have the amount transfer and combine them into your new pension plan for easier management.

If you cannot locate previous pension or do not remember who provided you with your pension you can contact your previous employers and they will informed you who was your pension provider and once you get in contact with them they will be able to tell you your pension balance, or you can try the Pension Tracing Service if you have difficulties tracking down your previous providers.

When you’re ready to set up your self-employed pension, you have several options, including a personal pension, a self-invested personal pension (SIPP) or a stakeholder pension. The government scheme NEST (National Employment Savings Trust) is now open to self-employed people too.

There’s no best pension for the self-employed, and what fits best will depend upon your individual circumstances. Finding a provider who lets you make contributions as and when you want can be a good option though, because your income may not be as predictable as you’d like.

Girlfridayz limited is a registered Self-employed company and we thought of reminding other self-employed companies about the possibility for you as self-employed to save for the future and pay into your pension pot through a Personal Pension.

Oh, we've updated our brochure and you can download it here as we maybe able to assist you with Marketing Services either be Digital, Traditional or Social Media Marketing notwithstanding but including Back up Admin Service.

At Girlfridayz we are expert at what we do hence our expertise will shine through all your marketing and ensure that your marketing needs are met to your satisfaction.

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