Do you get a pension if you are self-employed?

Do you get a pension if you are self-employed?

There are various advantages gained from going the self-employment route rather than being an employee. There’s greater flexibility, you can work your own schedule, and create a work environment that best fits your needs. However, there’s one point that many self-employed individuals wonder: do they receive a pension?

Do you get a pension if you are self-employed?

If you are self-employed and hoped you were building up a pension pot in the background, we have some bad news. Unlike employees, you’re not automatically enrolled onto any type of pension plan. This is something that you are responsible for arranging on your own.

As this is the situation, it shouldn’t come as a surprise that the number of self-employed pensions is low. Our research reveals 44% of those self-employed have no form of pension plan in place. This is compared to only 15% employees that are in the same position.

There are various reasons why a self-employed person may opt against a pension. They could see it as too expensive for example, or they could overlook the importance of having one for their retirement. However, it doesn’t have to be expensive, it is essential for retirement, and there are various benefits for those with a pension.

Do you get a pension if you are self-employed?

The benefits of pensions for the self-employed

As mentioned, there are numerous advantages on the table for the self-employed that get a pension plan.

The most notable benefit, of course, is that you are saving for your long-term future. Your pension contributions will be saved up into a big pot, and you will be able to access this once you reach the normal minimum pension age. This is currently 55 years of age, although in 2028 it is set to rise to 57.

If you have ever had a workplace pension scheme in the past, you will likely know that employers pay into this scheme – and that adds more to your overall pension pot. However, tax breaks are still up for grabs for those who are self-employed. This is based on the tax rate you pay. If you’re at the basic rate (20%), this will add an extra 20% to your pension contributions. If you are a higher-rate taxpayer, you could reclaim an additional 20% tax on your pension contributions, for a total of 40% tax relief.

Aside from this tax contribution, you also have to factor in the compound interest you gain on your pension pot in general. The longer you keep contributing and building up your pension, the more you will gain from this interest.

An extra benefit for self-employed workers is the added flexibility. You have the ability to pick which funds to invest in with your savings and you can pick when to make contributions to your pension, where you’re not stuck with fixed terms. These aspects help you to have full control over your pension.

How iSIPP can help with your self-employed pension

If you need any help getting started with a personal pension, you have landed in the right place. At iSIPP, you will find a service and platform that makes this task an effortless one.

We understand the challenges that self-employed people face. This is why our platform is built to empower, not prohibit your pension plans. You can contribute whenever and wherever with our 24/7 platform.

Do you have any old workplace pensions? We can also assist with consolidating all of these into a single location. This not only provides full visibility over your pension savings, but it also makes it incredibly simple to manage. Invest and contribute however you want, with nobody else dictating your pension plan.

Take control of your financial future today with iSIPP.

You might also like:

Pensions for contractors

Pension tax relief for self-employed and contractors

Pensions for the self-employed




The content of this article is for general information purposes only and should not be construed as legal, financial or taxation advice. You should not rely on the information contained in this article as legal, financial or taxation advice. The content of this article is based on information currently available to us, and the current laws in force in the UK. The content does not take account of individual circumstances and may not reflect recent changes in the law since the date it was created. It is essential that detailed financial and tax advice should be sought in both jurisdictions and any legal advice, if required.

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