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Pensions for the self-employed: your know-how

Workplace pensions offer a variety of benefits, including employer contributions. Perhaps one of the key benefits is that workplace pensions are set up for you by your new employer when you start your job, eliminating any hassle or work for you to do in arranging your pension.

When you’re self-employed, setting your pension up is your sole responsibility, and not one to be taken lightly. Whilst the main focus will be driving your own work opportunities, it’s important not to push the pensions and retirement planning to one side. After all, delaying pension planning now, could cause some issues in future. 

An estimated 69% of the self-employed don’t have any pension savings – an alarming result which shows that not enough people are educated on the importance of saving for later life.

Luckily, the team at My Pension Expert are here to provide the much-needed info on setting your pensions up if you’re self-employed!

Pension freedom

Although it might seem like a burden making your own pension arrangements, it’s quite the opposite. Organising your own pension gives you the freedom to choose which provider suits you, your pension pot, and your circumstances rather than the having one automatically assigned by an employer.

If you’re self-employed, there are generally three types of pensions you can opt for – these options are standard personal pensions, self-invested pensions (SIPP) and stakeholder pensions. What type of pension you choose is dependent on aspects such as the flexibility of your earnings, the charges you’d be willing to pay and the convenience of setting the pension up.

Prior to setting your pension up, it would be beneficial to double-check any old workplace or personal pensions you may have and if it would be worth consolidating them. Of course, convenience should not be the main motivation for doing this; you must be sure pension consolidation suits you, your current circumstances and future needs. Further, we recommend to always seek financial advice before making a final decision. 

Still reaping the benefits

A common pensions myth is that the self-employed miss out on valuable benefits that workplace pensions reap – this couldn’t be further from the truth! The key and unique advantage that workplace benefits offer are the employer contributions that can top up your pension pot. Just because you are your own employer, doesn’t mean you’re missing out on other benefits, you can simply add extra contributions yourself!

Other than this, your self-employed pension can still benefit from the rewards a workplace pension can offer. Such rewards can include tax relief and death benefits – that’s right, you can still get tax relief on a pension set up by you! For more information on pension tax relief, read our blog here.

It’s worth noting that as with workplace pension holders, you need to qualify for pension tax relief via a minimum requirement of National Insurance contributions. 

Advice and your pension

Your retirement finances might not be the priority right now – but planning for life after employment really is a necessity. When you’ve worked hard all your life, there’s nothing quite like kicking back and enjoying your newfound free time without the worry of what money you’re spending or where your next payment will be coming from. 

If you’re facing uncertainty about planning financially for your retirement, we highly encourage you to seek advice. Financial advice is imperative when facing retirement, especially when facing retirement without the safety net of an automatic enrolment into a pension scheme. You can get advice regardless of your financial knowledge, or the stage you’re at in your pensions – whether it’s setting just setting them or withdrawing them. 

At My Pension Expert, our advisors offer recommendations which are fully tailored to your financial circumstances and goals. Our team of experts possess all the knowledge needed to make sure your workplace or self-employed pension is working for you. The advice we provide is fully regulated and is in the best interest of you and the kind of retirement you want to live!