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How to Start a Pension When You’re Self-Employed?

There are plenty of perks that come with being self-employed, but being your own boss does mean you’re responsible for your pension arrangements. Although a daunting prospect, it’s important you start saving for your retirement as soon as possible and we’re here to help make it super simple.  

There are a variety of pension options available for the self-employed. The most popular options are:

  • A private/personal pension is a simple, flexible option. You decide how much you want to contribute to your pension and how it is invested.
  • A Self-Invested Personal Pension (SIPP) is more flexible than a personal pension in that you have more control over how your money is invested, and you can access the pension more easily. But SIPP pensions can be complex to set up and manage.
  • National Employment Savings Trust (Nest) is a government workplace pension scheme. Whilst it’s a government-backed workplace pension scheme, it’s not the same as the state pension and the pot is made up of contributions made by workers and employers and not from taxpayers.
  • Lifetime ISA (LISA) aren’t actually pensions but they do look and act pretty similar as they’re designed to help you save for things like your retirement. With a LISA, for every £4 you pay in, the government adds £1. So if you pay in the maximum of £4,000 a year, you’ll get £1,000 from the government at the end of the tax year. It won’t help you save nearly as much as a pension, but the money is already yours so you won’t pay tax when you draw it out. 

Here are Norwich Accountancy’s five steps to starting a pension when you’re self-employed in the UK.

1. Choose a pension provider

As you can see, there are a wide variety of pension providers offering options for self-employed people. Compare what providers are offering, such as investment options, contribution levels, customer service and fees charged, before deciding where you’ll put away to fund you later in life.

2. Open a pension account

Once you’ve picked your pension provider, start the process of opening a pension account with them. Generally, it’s a simple process, which can be done online, but ask for help from a pension professional if you’re not sure about anything.

3. Make a contribution to your pension account

Start to make contributions to your pension account on a regular basis, i.e. weekly or monthly when you get paid at the end of the month. Or, you can make a lump sum payment – how much you contribute is up to you.

Talking about accounts

4. Invest your money

Once you’ve made a contribution to your pension pot, decide how you want it invested. There are lots of pension investment options available so choose the one that suits your appetite for risk and your investment goals. This is where getting some professional advice can work wonders and give you peace of mind that your pension is in the right place.

5. Review your pension regularly

Make sure you review your pension account regularly to check whether it still meets your needs. If investment market conditions or your circumstances change, you may need to adjust your contributions or investment options.

Here are some bonus pension tips for the self-employed:

  • Make regular contributions, even if it is a small amount to start with.
  • Invest wisely by choosing investments that are right for you and your personal circumstances. If you’re not sure, talk to our pension professionals who’ll help you understand your options to help you make an informed decision.

Whichever pension option you choose, the sooner you start contributing to the pension the more time your money has to grow, and the more you’ll have when the time comes to retire. Getting pension advice and starting a pension when you’re self-employed is an important step in planning for your retirement goals, and keeps you on track. 

Need help to pick the right way to build a pension pot? Get in touch with our pension experts today.

Checking accounts at desk