Workplace pensions if you’re self-employed

Saving for the retirement you want when you’re self-employed.

What is a self-employed pension?

If you’re self-employed you can set up your own defined contribution pension to save money for your retirement. Unlike employees who are auto-enrolled in a workplace pension, you’ll need to arrange this yourself.

Research suggests just 18% of self-employed people pay into a pension – much lower than the number of employed savers. But the sooner you start saving, the longer your money has to grow.

Saving for your future when you’re self-employed 

You don’t legally have to have a pension. But it’s sensible to think about the income you need to have the retirement you want – and how you’re going to save for it.  

There are different pension options to choose from when you're self-employed: 

  • Self-invested personal pension (SIPP) – A SIPP is a personal pension that gives you flexibility over contributions and full control of how your money is invested, including the level of risk. It’s ideal if you want to manage your own investment choices. You can choose how much to contribute and how often, with the option to make one-off payments. You’ll also receive tax relief on your contributions – meaning the government adds money to your pension, making your savings go further. 
  • National Employment Savings Trust (NEST) – A government-backed workplace pension scheme which allows self-employed people to join and set up a personal pension.

Pensions aren’t the only way to fund your retirement, but they do offer valuable tax benefits. Investing in property or saving into an ISA can also generate an income for your future. Unlike pensions, these types of investments are not locked away until you’re at least 55 (increasing to 57 from April 2028). 

However, pensions offer two valuable tax advantages: 
  • Tax relief on your contributions. The government adds money to your pension, reducing the cost of saving. 
  • No tax on investment growth within the pension. Your pension savings can grow free from income tax and capital gains tax. 

If you can afford to, you might choose to pay into a pension while also investing in other ways. This allows you to enjoy the tax perks of a pension while having accessible money, should you need it. 

Why pensions matter if you’re self-employed

You can claim the State Pension, but how much you claim depends on how many years you have made National Insurance contributions. However, even the full amount is unlikely to cover a comfortable retirement. Plus, the age you can claim is rising – to 67 by 2028, and 68 between 2044 and 2046.

A personal pension helps bridge the gap:

  • Access funds earlier than State Pension age if you need to stop working.
  • The government tops up your contributions in the form of tax relief. For every £80 you pay in, the government adds an additional £20 if you’re a basic-rate taxpayer. Higher-rate taxpayers can potentially get even more.
  • Make flexible payments – regular or one-off – to suit fluctuating income.

The earlier you start saving, the longer your pension has to grow. You can use a pension calculator to get an idea of your likely pension income.

How to set up a self-employed pension

Personal pensions are offered by a range of providers, including banks, building societies, investment platforms and insurance companies. You can choose a pension provider and pension plan that best suits your needs.

You’ll need to:

  • decide how much and how often you want to contribute 
  • check that the scheme is registered so you will receive tax relief (this is usually done automatically, unless you’re a higher rate taxpayer).

We don’t currently offer a pension product specifically for self-employed individuals. But if you have a workplace pension from a previous job with us, you can pay personal contributions into your existing account.

And remember that if you have previously been employed, even for a short time, you may have some old workplace pensions. You might choose to transfer these into a new pension to make it easier to keep track of your savings.

What is the best pension for self-employed people in the UK?

There are a number of different personal pensions available for self-employed people, offered by a range of providers. The best one for you will depend on your personal circumstances.

MoneyHelper has a step-by-step guide to setting up a pension if you’re self-employed, with information on comparing providers and choosing the right pension for your needs.

Setting up a workplace pension if you’re self-employed

As a self-employed person you will not be automatically enrolled in a workplace pension scheme under auto-enrolment.

However, if you run a limited company and employ others, you can set up a workplace pension scheme that you and your employees can join. This is known as a small self-administered scheme (SSAS).

Learn more about setting up a workplace pension scheme and meeting your duties if you’re self-employed in our setting up a workplace pension guide.