Pension Planning For The Self-Employed

  • Our Wales based mortgage experts work tirelessly to get you the right deal.
  • We've helped hundreds like you secure their dream home and invest their money wisely.
  • Our 5* rated advisers are ready to hear from you today.

Get in touch for an initial fee free, no-obligation chat with an adviser about how we might be able to help.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE AND ANY OTHER DEBTS SECURED ON IT.

Get in touch

The internet is not a completely secure medium, so we can't guarnatee the privacy of your data.

How would you like to be contacted?

Home 5 Blog 5 Pension Planning For The Self-Employed

Pension Planning For The Self-Employed

There are 4.8 million self-employed people in the UK and only a third have any kind of pension arrangement. A shocking statistic when you consider that State support is shrinking and we’re all living longer.

Of course, saving for a pension when you’re self-employed is not as straightforward as it is for an employed person, who might automatically benefit from a workplace scheme and employer contributions. We’ve outlined some key points below for you to consider:

Don’t rely on the State Pension

Whether you’re employed or self-employed you’re entitled to the full basic State Pension (currently £129.20 a week) if you’ve paid in 30 years of National Insurance Contributions.

If you’re self-employed you can only claim the additional State Pension if you’ve had periods of employment.

On its own then, State support is unlikely to enable you to continue your current standard of living into retirement. That’s why it’s imperative for the self-employed to find other ways to provide the additional income needed in retirement.

Start saving early

It’s stating the obvious, but the sooner you start saving into a pension the bigger your potential retirement fund. You’ll also have more time to benefit from the tax relief that’s available.

To highlight the importance of saving early, a 25-year-old male looking to retire at 68 would need to contribute £236.25 per month in order to achieve a retirement income of £17,500 a year. If the same man had waited until he was 45 before he started saving, he would need to contribute £495.83 to achieve the same level of income, an additional £259.58 per month.

Minimise the amount of tax you pay

One of the main benefits of paying into a pension is the tax relief the savings attract. For example, if you’re a basic rate taxpayer paying £100 into your pension each month, HMRC will effectively add an extra £20 in tax relief.

The maximum amount you can save each year that attracts tax relief (otherwise known as the annual allowance) is £40,000.

Importantly, if your income is low and you’re not able to save the full £40,000 in one tax year, you can carry forward any unused allowance, and use it against earnings in the next tax year. Please note:

  • You must have been a member of a registered pension scheme during the years you want to carry forward
  • Your tax relief is limited by your annual earnings in the year you want to carry forward
  • You can only carry forward unused allowance from the three previous tax years

What type of pension is right?

The self-employed can choose from a range of different pension products, including stakeholder pensions, personal pensions and Self Invested Personal Pensions (SIPPs). Each has its advantages and disadvantages – we can advise on which is best for you.

Perhaps the most flexible pensions are stakeholder schemes. They allow you to save as little as £20 per month and the charges are relatively low, which is helpful if you have irregular income levels.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes, which cannot be foreseen.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

Key takeaways:

  • A state pension alone is unlikely to be sufficient to fund your retirement.
  • Make your money go further by taking advantage of the tax relief available on your pension savings.
  • There are a lot of factors to take into account when choosing a pension, so it makes sense to get professional advice.

What people are saying:

sam tapsellsam tapsell
17:17 11 Mar 24
Chris has been super helpful, always provided honest advice tailored to my situations. Highly recommend!
Ann-Marie JonesAnn-Marie Jones
17:47 18 Jan 24
Highly recommend Chris at Exley Financial Planning. He was really helpful and has walked through each stage carefully with patience and helped secure us a better rate on our mortgage.
Jasmine ScottJasmine Scott
20:21 18 Jul 23
I’ve had the pleasure of working with Chris now for over 6 years. He’s arranged my last three mortgages for me successfully. I’ve always found Chris to be highly efficient, and clear and open in all of his communications. He’s also taken the time to explain my options and be at the end of a phone. I trust him implicitly and would recommend him to anyone looking for sound financial advice and support regarding money matters.
Mike WilliamsMike Williams
16:37 18 May 23
Couldn't recommend a better financial planning advisor.Chris's help, advice and knowledge base was second to none.
Deborah NDeborah N
11:41 18 May 23
Chris was outstanding. His service was attentive, comprehensive and he displayed an impressive knowledge of his field. He was always easy to contact, friendly and returned calls and messages promptly. His help was invaluable. We are incredibly grateful for all his assistance and wouldn't hesitate to recommend him to others.
Jay ProbertJay Probert
12:02 07 Jul 22
Chris was referred to my wife an i by a neighbour. Despite conducting all communication online (emails/MS Teams calls) at all times Chris has remained personable and responsive. My wife and i are far from experts in this field but Chris' calming approach to the process has been most reassuring and would strongly recommend his services to others. Thanks Chris.
Alexia BowlerAlexia Bowler
08:27 25 Apr 22
We recently used Exley Financial Planning (Chris) for our mortgage and they were so professional, efficient and listened to our every need. We got some very good advice and felt confident that they had our interests at heart. I would use Exley Financial Planning again for anything finance related, and feel relieved we've now got someone who takes us through documents and processes (most of which are fairly confusing!), step-by-step. Thanks Chris!
bethan boddybethan boddy
11:55 08 Mar 22
Fantastic service from Chris.Chris helped me with the process of getting my mortgage from start to finish. As a first time buyer, I was clueless. Having Chris help me made the process a lot easier and he was able to explain information to me that I was unsure off.I highly recommend this company to anyone, especially first time buyers.
Ellen MorganEllen Morgan
08:26 31 Mar 21
I can’t thank Chris enough for all his help throughout my purchase. It hasn’t been an easy process buying my first home during a pandemic, but Chris made securing a mortgage a breeze! Chris is very knowledgable and was honest with me from the outset about what was affordable for me and the mortgages available. It has been a long process for me, but Chris is always available on the other end of the phone to answer any questions I had and kept me updated every step of the way. Brilliant service, I would highly recommend! Thank you Chris!
Rod DCRod DC
19:42 19 Aug 19
Chris has been absolutely fantastic in helping us secure our mortgage offer.Our own situation was a bit more complex due to work and contracts but Chris has worked extremely hard to find us a mortgage that suits us.The quality of service has been top notch from the first meeting. Communication has been excellent and we have been constantly updated on the situation and progress of all processes.It has been so worth employing the services of Exley and I cannot recommenced the service more.
js_loader

What we’re talking about:

7 Mortgage Mistakes You Need To Avoid

Get in touch

The interenet is not a completely secure medium, so we can't guarnatee the privacy of your data.

How would you like to be contacted?

You May Also Like…

Weekly Market Update

Weekly Market Update

Our weekly market update is brought to you by our partners - Omnis Investments. This page is updated around Mid day...