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Are PAYE contractors entitled to a pension?

PAYE contractors are entitled to a pension just like any other employee. However, there are a few extra things you'll need to know.

In this article, we'll look at how pensions work for PAYE contractors.

How PAYE contractor pensions work

As a PAYE contractor, you'll still have access to the same pensions as any other worker.

When contracting with an employer, you may be eligible to join their workplace pension scheme. Additionally, you might also want to consider taking out a private pension of your own.

As you move between different contracts and employers, it's easy to lose track of any small pension pots you pick up along the way. A private pension can help you consolidate these pots in one, easy to manage place.

First, let's look at getting a pension through your employer.

Auto-enrolment for PAYE contractors

When you register as a PAYE employee, you’ll enter a 12-week postponement period. This time is used to assess contracts and determine if you should be enrolled in the workplace pension scheme. 

Once you've passed this postponement period, your employer will assess your eligibility. In order to enrol in your business’ workplace pension scheme you'll need to be:

  • at least 22 years old
  • under the State Pension age
  • earning more than £805 per week 
  • working in the UK

As long as you meet these requirements, your employer will contribute a minimum of 3% of your pre-tax salary into a pension for you, depending on how their pension scheme works. You can reach out to the HR or Finance team for more details.

Next, let's look at how you can take your pension into your own hands.

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PAYE contractor pension

Private pensions for PAYE contractors

On top of any workplace pension you join, PAYE contractors can also set up a private pension.

A private pension allows you to make additional contributions into your future pot, while still getting to trim your tax bill.

As a contractor, you could also use your private pension as a central hub to transfer any old pension pots you’ve accumulated from previous contracts. This gives you full visibility over your pension, letting you easily track your savings and vastly reduce any paperwork.


Remember to first make sure combining is the right thing for you and that you won't be losing any benefits by doing so. We've compiled a handy checklist for consolidating pension here.

Ready to bring your pensions together? Penfold can help.

Our flexible pension is perfect for contractors and also offers a free, no-hassle pension track and consolidation service. All you need to do is send us your old pension details and our expert transfer team will take care of everything for you.

Once the transfer has come through, you can even track and forecast your future with our pension calculator.

To find out more about our free transfer service, head here.

It's important to compare providers’ fees and any guaranteed benefits when deciding on whether to transfer, and be sure that the investments available are suitable for you. We cannot accept defined benefit pension transfers. If you decide to close your Penfold account and the value of your pot has gone down, the amount returned to the provider may be less than what you originally transferred.

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