Pensions for contractors

Pensions for contractors

Pensions are a superb way for contractors to save up for their financial future, as they offer some unique flexibility that suits the nature of contract work perfectly.

Thanks to changes made in legislation back in 2015, you can now access as much of your pension as you need (once you turn 55), which gives you a few options when it comes to deciding how to withdraw your savings.

As a contractor, all that’s left is to decide how and where you want to invest your money, so it’s important to make an informed decision – this will give you the best chance of maximising your retirement savings for the future.

Contractors and pensions

Due to the nature of contract work, there’s a good chance your income will be somewhat irregular. This can make it tricky to save for the future, especially if you aren’t able to predict how much money is coming in each month.

Contractors generally take on more risk in this regard, as short-term work requires greater attention to detail when it comes to saving money. Therefore, you may be wondering, do contractors get a pension? Thankfully, there are some great options available.

Pensions are still one of the safest and most reliable forms of investment, largely due to their unique tax benefits, so if you’re hoping to prepare for the future, it’s certainly worth considering setting up a pension scheme.

What are the pension options for contractors?

One of the best parts about pensions for contractors is that you get tax relief on any contribution you make. You could decide to pay into a SIPP pension (self-invested personal pension), which enables you great flexibility when it comes to deciding which funds to invest your pension in.

You could also choose a stakeholder pension scheme, which is more limited in terms of where you can invest your savings, but depending on the assets held in the scheme, it could pose a lower risk.

When it comes to paying in, you can choose to pay directly into your pension from your own money, contribute via your company bank account, or contribute through an umbrella company.

Making a contribution through a Ltd company is more profitable, as it reduces your company’s profits and, therefore, your tax liability.

Personal contributions are topped up by the pension provider, meaning that they will add 20% on top of your initial payment (due to personal tax relief rates). There is a limit to the amount of relief you can receive, however, and this is currently capped at 100% of your income annually, or £40,000, whichever comes first.

If you do wish to make a larger contribution, you may be able to benefit from the carry-forward rule. This rule can be a great benefit to contractors, as it enables you to use up your annual tax-free allowance of £40,000 that you might not have used in the previous three tax years. You don’t need to let HMRC know about this – it will happen automatically.

How iSIPP can help

At iSIPP, we recognise the immense value of flexibility in pensions, and we believe you deserve complete control over your money.

We can help you consolidate your pensions and provide you with the tools to carefully invest your money in a way that best suits your needs as a contractor.

You also can make regular or one off contributions to your pot, allowing you to adjust the way you contribute depending on your circumstances.

It’s easy to get started, and our online platform is highly accessible and user-friendly, making it perfect for contractors wishing to manage their wages and maximise their savings.

Benefits of iSIPP for contractors

Our pension management platform is available from anywhere in the world, so whenever you need to make a contribution, we’ve got you covered. It is paper free and flexible – perfect for contractors.

With 24/7 access to your account and funds provided by leading fund managers, you can easily keep track of your pension performance wherever your contracts take you.

If you feel like now is the time to take control of your pensions, we can help you combine them into an easily manageable location.

Your retirement shouldn’t suffer just because your income might be irregular, and with the help of iSIPP’s expert services, it won’t. You can choose to contribute regularly or in one-off lump-sums. Plus we are FCA regulated, so you can rest assured your pensions are in safe hands.

If you have any questions at all, or you’re curious as to how we can help you make the most of your pension, reach out to us today.




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.

This notice cannot disclose all the risks associated with the products we make available to you. When making your own investment decisions it is important you understand that all investments can fall as well as rise in value and it is possible you may get back less than what you have paid in. You should also be satisfied that any investments you choose are suitable for you in the light of your circumstances and financial position. You should seek financial advice if you are not sure of what’s best for your situation.


Apply now


Subscribe to our newsletter