Self Employed Pensions: 5 Things To Know
The latest research shows that 39% of self-employed people aren’t setting aside enough for retirement and 23% aren’t saving anything at all[1].
If you’re self-employed and haven’t been paying attention to your pension savings, you could struggle to fund your lifestyle in retirement. The good news is, with our support, you can create a retirement plan and make sure you have more than enough to live the life you want in your later years.
Here are five important pension tips to know if you’re self-employed.
- Think about the kind of retirement you want
If you don’t have any kind of retirement plan in place, you’ll need to set up a pension and start contributing. But before you deal with the practical side of things, it might be useful to think about what kind of life you envisage in retirement.
Do you want to travel a lot or would you rather spend time at home with your family? Would you stay in your home or downsize? Do you have kids and grandkids that need your financial support?
The answers to these questions might change over time but having a general idea of the kind of lifestyle you want – and more importantly, how much it will cost – allows you to create a retirement savings goal.
We can help you estimate your costs and set a target so you have something to aim for when you start saving. Without this goal, you won’t know how much you need to pay into your pension each month.
- Open your own personal pension
When you’re employed, your boss is legally obliged to enrol you in a pension and start paying into it if you earn a certain amount.
That isn’t the case if you’re self-employed, which is why so many fail to pay into a pension. It’s one of those things you might’ve thought about in passing but just haven’t got around to yet.
If that sounds familiar, it may be sensible to open your own personal pension as soon as possible because the earlier you get started, the longer you have to build your pot. And, the money in your pension is invested, so giving it longer to grow could make a big difference to your financial position later in life.
We can help you find a suitable pension scheme and decide how much you need to contribute, based on your dream retirement lifestyle. We’ll give you guidance about your investment choices too, so you can grow your savings consistently.
- Look for old pension pots if you’ve been employed in the past
If you’ve been self-employed for your entire working life, you won’t have any pensions unless you started one yourself. But if you were previously employed, you may have been automatically enrolled into a pension.
It’s worth getting in touch with your old employers and asking whether you were part of a pension scheme and which provider it was with. Depending on how long you were employed for, you might have a significant amount of savings sitting untouched in an old pension.
We can help you track down any lost savings and move the funds into your new personal pension if suitable, giving you a great head start with your retirement plan. Otherwise, we might recommend that you keep them separate but either way, you can track and manage all available savings.
- Take advantage of the tax benefits of your pension
There are a few key benefits of saving in a pension. First, the money is invested on your behalf and, depending on the markets, could grow more than it would if it was in a simple savings account.
Second, there are some excellent tax benefits.
When you pay into a pension, you automatically receive 20% tax relief on the contribution. This means that for every £80 you pay in, the government adds another £20. And if you’re a higher- or additional-rate taxpayer, you could claim another 20% or 25% on top of this.
This means you could reduce the Income Tax you pay by paying into your pension, but you wouldn’t get this benefit if you used a savings account or standard investment account.
Sole traders can take advantage of this tax relief when making personal contributions, but pensions also have brilliant tax planning advantages if you run a limited company.
You can pay pension contributions to employees – including yourself – from the business. All these pension contributions are usually treated as allowable business expenses. This means that paying into your pension through the business could help you reduce your Corporation Tax bill. You won’t pay National Insurance contributions (NICs) on the amount contributed either.
Business owners often take advantage of this to draw money from their company tax-efficiently.
All the tax rules surrounding pensions can be confusing, but we can help you take full advantage of the benefits.
- Check your State Pension entitlement
It’s important to build savings in your personal pension, but you might also receive the State Pension to cover some of your expenses in retirement. However, you’ll need to check how much you’re entitled to.
This all comes down to how many “qualifying years” you have. You need at least 10 to get any payments at all, and 35 to receive the full payment.
A qualifying year is any year in which you were:
- Employed and paying NICs
- Self-employed and paying Class 2 NICs – in 2025/26, you need to earn at least £6,845 to pay NICs
- Paid voluntary NICs
- Received NI credits – if you were caring for a child or in receipt of certain benefits, for example.
If you earned less than the threshold in certain years or worked outside the UK for a period, for example, you might not meet the 35-year threshold so wouldn’t be entitled to the full State Pension payment.
The good news is you can check your entitlement online here and pay to fill any gaps from the past six tax years so you can reach the 35-year threshold.
We can help you work out whether it’s worth doing this and ensure you receive as much as possible from the State Pension.
If you want more information about starting your own retirement savings plan, our Guide to Building Wealth has everything you need.
Get in touch
Heidi Tresadern is Wealth Planning Director at Benchmark Financial Planning, Maidstone. Heidi has over 30 years’ experience and supports all needs from starting out and building wealth, to wealth preservation for future generations and use of assets to fund long term care.
Please visit our contact page to speak with Heidi and the team.
Approved by Best Practice IFA Group on 4th September 2025.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Benchmark Financial Planning is not responsible for the accuracy of the information contained within linked sites.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Workplace pensions are regulated by The Pension Regulator.
Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulation, which are subject to change in the future.
[1] 27.08.2025 ‘Critical’ need to close the UK’s self-employed pensions gap Yahoo Finance