What is the Best Pension for Self-Employed People?

There are many benefits to being self-employed. You’re your own boss, and you’re solely responsible for everything you do and everything you achieve. This can be immensely rewarding – not to mention immensely profitable.

But there are downsides to being self-employed. And a major one is that you miss out on all the benefits that you’d get if you were an employee for someone else: sick pay, holiday pay and, perhaps most crucial of all, a company pension plan.

Yet this doesn’t mean that self-employed people can’t have pension plans. You just need to make your own arrangements. But what’s the best pension plan for self-employed people?

If you’re self-employed you need to make your own pension arrangements

State Pension for Self-Employed People

If you’re self-employed, just like everyone else, you’re entitled to the state pension. At the time of writing, there’s a flat-rate state pension which is based on your National Insurance contributions. The maximum value of this is currently £134.25 a week.

For a complete guide to the basic state pension, head to the government’s website. You can also see how much you’ve built up by viewing your state pension statement.

So even if you make no additional arrangements, thanks to the state pension, you’ll still have something to live on once you reach retirement age. The question you have to ask yourself is, will it be enough? If not, you should consider making pension contributions of your own.

Saving For Retirement as a Self-Employed Person

If you worked for a company, your employer would pay into your workplace pension scheme. This would help boost the amount you can save for retirement. But if you’re self-employed, you won’t have a workplace pension scheme unless you set one up yourself.

There are tax breaks for self-employed people who contribute towards their state pension. The amount the government puts in will depend on your income. But if you’re on the basic tax rate, for every £100 you put in your pension, the government will contribute £25.

Head here to read a complete guide to the government’s pension tax relief scheme.

Independent Pension Providers

If you don’t want to make your own pension contributions, you can get a pension provider to do it for you. These don’t come for free. But as it simplifies a process that can get pretty complicated, it might be a price worth paying.

Most pension providers offer “personal pension” arrangements. This means they’ll claim tax relief at the basic rate on your behalf, and add it to your pension savings for you. But for an additional fee, some providers will allow you to tailor your investment options based on your exact needs.

The government has an excellent guide to personal pensions .

NEST Pensions for Self-Employed People

The National Employment Savings Trust (NEST) is the government’s pension savings scheme. While it’s primarily designed for people in full-time employment, so long as you meet the criteria, you might also be able to apply as a self-employed person.

For more information, and to see if you’re eligible, head to the official NEST website.

Other Things You’ll Need as a Self-Employed Person

Few things are more challenging yet more rewarding than the self-employed life. But being your own boss does mean missing out on many of the benefits that those in full-time enjoyment can take for granted.

Another downside to being self-employed is that you’re personally responsible for everything that happens to your business. That’s why it pays to have a safety net.

Insurance will give you essential cover against all eventualities, from dissatisfied clients to onsite accidents; from cyber-attacks to HMRC investigations. Insurance guarantees that, no matter what happens, you’ll be able to continue trading and recover from any business setback.

At Tapoly, we specialise in bespoke insurance for self-employed people like you. We offer comprehensive insurance packages that will give you the tailored cover you need at a price you can afford. Head here to get a quote in minutes.